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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?
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?
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?
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?
In the Romer model, which statement is true about two identical countries, aside from their technology levels?
What parameter represents the productivity of R&D in the Romer model?
What parameter represents the productivity of R&D in the Romer model?
What does the parameter λ represent in the technology diffusion model?
What does the parameter λ represent in the technology diffusion model?
How does the evolution of technology stock in an economy look when adoption rates increase unexpectedly?
How does the evolution of technology stock in an economy look when adoption rates increase unexpectedly?
When two economies are integrated, which of the following changes occurs in their technological evolution?
When two economies are integrated, which of the following changes occurs in their technological evolution?
What happens to the long-run growth of output when the share of the population working in R&D increases?
What happens to the long-run growth of output when the share of the population working in R&D increases?
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?
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?
What does the Romer model suggest about the relationship between the parameter $a_{bar}$ and long-run growth?
What does the Romer model suggest about the relationship between the parameter $a_{bar}$ and long-run growth?
In a technology diffusion model, what is the implication of differing adoption rates between two countries?
In a technology diffusion model, what is the implication of differing adoption rates between two countries?
Which statement is true regarding the stock of technologies $A(t)$ in an economy with scientists impacting its growth?
Which statement is true regarding the stock of technologies $A(t)$ in an economy with scientists impacting its growth?
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.
