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Questions and Answers
According to the passage, which of the following is a key characteristic of models of endogenous growth?
According to the passage, which of the following is a key characteristic of models of endogenous growth?
What is the relationship between the level of human capital and the rate of technological progress, according to the passage?
What is the relationship between the level of human capital and the rate of technological progress, according to the passage?
According to the passage, which of the following is true about the effect of increasing the saving rate or the fraction of output spent on education and training?
According to the passage, which of the following is true about the effect of increasing the saving rate or the fraction of output spent on education and training?
Which of the following best describes the current consensus on models of endogenous growth, according to the passage?
Which of the following best describes the current consensus on models of endogenous growth, according to the passage?
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What does the passage mean by 'steady-state growth'?
What does the passage mean by 'steady-state growth'?
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Which of the following best describes the relationship between the growth rate and the rate of technological progress, according to the passage?
Which of the following best describes the relationship between the growth rate and the rate of technological progress, according to the passage?
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Which of the following statements is true regarding the long-run growth rate?
Which of the following statements is true regarding the long-run growth rate?
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What is the effect of an increase in the saving rate on the level of output per worker?
What is the effect of an increase in the saving rate on the level of output per worker?
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In the context of the economic growth model described in the text, what does the slope of the line representing an economy's path on a logarithmic scale indicate?
In the context of the economic growth model described in the text, what does the slope of the line representing an economy's path on a logarithmic scale indicate?
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What happens to the growth rate of output per worker after an economy reaches its new higher path following an increase in the saving rate?
What happens to the growth rate of output per worker after an economy reaches its new higher path following an increase in the saving rate?
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In the context of the economic growth model described in the text, what does public saving refer to?
In the context of the economic growth model described in the text, what does public saving refer to?
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How can governments affect the saving rate?
How can governments affect the saving rate?
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Which of the following factors does output per worker depend on?
Which of the following factors does output per worker depend on?
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How can countries achieve higher steady-state levels of output per worker, according to the text?
How can countries achieve higher steady-state levels of output per worker, according to the text?
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What did the conclusion in the text NOT say about saving or spending more on education?
What did the conclusion in the text NOT say about saving or spending more on education?
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What have researchers explored following the lead of Robert Lucas and Paul Romer?
What have researchers explored following the lead of Robert Lucas and Paul Romer?
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What happens when there are increases in physical capital alone or increases in human capital alone?
What happens when there are increases in physical capital alone or increases in human capital alone?
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What question have researchers asked, according to the text, regarding the joint accumulation of physical and human capital?
What question have researchers asked, according to the text, regarding the joint accumulation of physical and human capital?
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Study Notes
Endogenous Growth Models
- Models that generate steady growth without technological progress are called endogenous growth models.
- These models contrast with others where growth rate depends on variables like saving rate and education spending.
Output per Worker
- Output per worker depends on physical capital per worker and human capital per worker.
- Both forms of capital can be accumulated through physical investment and education/training.
- Increasing saving rate or education spending can lead to higher output per worker in the long run.
Technological Progress
- The relationship between human capital and technological progress is unclear.
- Can a better-educated labor force lead to a higher rate of technological progress?
The Long Run
- The long-run growth rate is independent of the saving rate.
- The saving rate affects the level of output per worker, not the growth rate.
- An increase in the saving rate leads to growth above steady-state growth for a time.
The Role of Government
- Governments can affect the saving rate by varying public saving.
- Public saving is equivalent to a budget surplus, while public dissaving is equivalent to a budget deficit.
Endogenous Growth Theories
- Researchers like Robert Lucas and Paul Romer have explored the possibility that joint accumulation of physical and human capital can sustain growth.
- Increases in physical capital will run into decreasing returns, and increases in human capital will also run into decreasing returns.
- However, if both physical and human capital increase in tandem, can an economy grow forever?
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Description
Test your knowledge on models of endogenous growth in economics, which generate steady growth without technological progress. Explore how variables such as saving rate and education spending influence the growth rate in the long run. Understand the current consensus on endogenous growth models.
