growth modeling 中国经济发展与转型（英文版） 知识介绍.pptVIP

The Concept of Growth Modeling Todaro and Smith, Chapters 3, 4, and 5 The Concept of Growth Modeling GDP- gross domestic product -definition ? (everything produced in the country in the period of time used - usually quarter or year) The accounting identity (this is a definition, not a mathematical model) GDP = Y = C + I + G + (E - Im) where C = consumption, I = capital investment, G = government spending, E = exports, Im = imports In China, the I and G terms are combined. There are other ways of defining GDP, based on incomes and rents, and profits, but the identity in the previous slide is typical. This accounting identity is a definition, not a model- no reason to think that the terms are independent, so an increase in G could mean either an increase in Y or a decrease in C, or something else. The economic stimulus in the US and China in the last two years is a good example. In both countries, the government spending is an increase in government spending, which will increase consumption and investment. GDP will go up, which is the intent. But Y does not go up one for one with G, because some of the money “leaks out” of the economy (spent on imports, for example). The Concept of Growth Modeling So what can we do for longer term? What is the concept of growth in the longer term? Governments want to know how to grow the economy, and how to invest. Should they build more schools, or more high speed trains, or more apartments, or more science laboratories? -growth in GDP per capita is the usual measure (be careful. What would happen if everyone in China stopped smoking cigarettes?) This is the subject for another class. In general, we define three (maybe four) ways to increase per capita income- -more physical capital -more human capital -technological progress (productivity improvements) -agglomeration and scale economies How can GDP grow? if you have more people, they eat more, buy more clothes (assuming, of course, that it is possible