CHAPTER 7 Economic Growth I 宏观经济学 教程文件.pptVIP

After showing this slide, you might also note that the converse is true, as well: a fall in s (caused, for example, by tax cuts or government spending increases) leads ultimately to a lower standard of living. In the static model of Chapter 3, we learned that a fiscal expansion crowds out investment. The Solow model allows us to see the long-run dynamic effects: the fiscal expansion, by reducing the saving rate, reduces investment. If we were initially in a steady state (in which investment just covers depreciation), then the fall in investment will cause capital per worker, labor productivity, and income per capita to fall toward a new, lower steady state. (If we were initially below a steady state, then the fiscal expansion causes capital per worker and productivity to grow more slowly, and reduces their steady-state values.) This, of course, is relevant because actual U.S. public saving has fallen sharply since 2001. These calculations show that a one-half point increase in the growth rate has, in the long run, a HUGE impact on the standard of living. The $449 billion is in “today’s dollars” (i.e., measured in 2002 prices). In case you’re wondering how I did this calculation: Computed actual quarterly growth rate of real income per capita from 1989:4 through 1999:4. Added one-fourth of one-tenth of one percent to each quarter’s actual growth rate. Computed what real income per capita would have been with the new growth rates. Multiplied this hypothetical real income per capita by the population to get hypothetical real GDP. Computed the difference between hypothetical and actual real GDP. Cumulated these differences over the period 1990:1-1999:4. Like the original real GDP data, the cumulative difference was in 1996 dollars. I multiplied this amount by 10%, the amount by which the GDP deflator rose between 1996 and 2002, so the final result ($449 billion) is expressed in 2002 dollars, which I simply call “today’s dollars.” SOURCE of DATA: