Romer Model of Technology and Growth

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Questions and Answers

Which economy will experience a larger growth rate of technology when starting with unequal initial stocks of technology?

Neither economy will grow

The economy with a larger initial stock of technology (correct)

Both economies will grow at the same rate

The economy with a smaller initial stock of technology

What happens to the total stock of technologies when two economies open up and share ideas?

It only increases temporarily

It remains constant

It decreases due to competition

It increases, as technologies combine and evolve (correct)

What impact does an increase in the adoption rate have on an economy's stock of technology relative to the world technology frontier?

It decreases

It starts increasing at a faster rate (correct)

It fluctuates unpredictably

It stays the same

In the Romer model, which statement is true about two identical countries, aside from their technology levels?

The country with lower technology will have a higher growth rate Signup and view all the answers

What parameter represents the productivity of R&D in the Romer model?

a Signup and view all the answers

What does the parameter λ represent in the technology diffusion model?

The growth rate of technological adoption Signup and view all the answers

How does the evolution of technology stock in an economy look when adoption rates increase unexpectedly?

It experiences an exponential rise Signup and view all the answers

When two economies are integrated, which of the following changes occurs in their technological evolution?

Knowledge diffusion enhances overall growth Signup and view all the answers

What happens to the long-run growth of output when the share of the population working in R&D increases?

Output remains the same immediately Signup and view all the answers

In the Romer model, what is the effect of increasing the share of the population working in R&D on the growth rate of technology?

The growth rate of technology accelerates from the beginning Signup and view all the answers

What does the Romer model suggest about the relationship between the parameter $a_{bar}$ and long-run growth?

It affects growth positively in the long run Signup and view all the answers

In a technology diffusion model, what is the implication of differing adoption rates between two countries?

The higher adoption rate leads to faster long-run growth Signup and view all the answers

Which statement is true regarding the stock of technologies $A(t)$ in an economy with scientists impacting its growth?

The growth of the economy is positively influenced by the number of scientists Signup and view all the answers

Study Notes

Romer Model with Two Economies

Two economies do not interact.
Each economy has its own R&D and technology development.
Technology growth in each economy depends on the productivity of R&D, the number of scientists, and the current stock of technology.
The economy with a higher initial stock of technology will display a larger growth rate of technology.

Technology Diffusion Model

The model shows the evolution of a country's technology stock relative to the world technology frontier.
The country's adoption rate determines the speed of technology diffusion.
An increase in the adoption rate leads to a faster convergence towards the world technology frontier.

Romer Model: Technology and Growth

A country with a higher level of initial technology does not necessarily grow faster.
Increasing the share of population working in R&D leads to faster technological growth in the long-run but does not affect the immediate output growth.

Romer Model: Growth Rate

The Romer model exhibits long-run growth at a constant rate.

Technology Diffusion Model: Adoption Rate and Growth

The country with a greater adoption rate has a higher level of technology in the long-run.
It does not necessarily grow faster in the long-run, as both countries approach the world technology frontier but at different speeds.

Technology Evolution in a Closed Economy

The stock of technologies grows at a rate proportional to the number of scientists and the productivity parameter of R&D.
The model exhibits sustained positive growth in the long-run.
The growth rate is higher with higher productivity of R&D and with a larger population.

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Description

This quiz covers the Romer model focusing on technology growth in two distinct economies, emphasizing R&D and technology development. It explores the implications of initial technology stocks, adoption rates, and their influences on long-term growth. Test your understanding of how technology diffusion impacts economic convergence.