ECON 1110 Lecture Notes - Lecture 17: Barter, Diminishing Returns, Knowledge Transfer
8 Apr 2016
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Document Summary
In neoclassical theory, technology is assumed to be exogenous. Many innovations are embodied in physical or human capital. Endogenous explained by theory: technology is explained in the model, learning by doing, knowledge transfer (diffusion, market structures (competition can force firms to innovate, shocks. Once overcome, fewer problems will encounter subsequent investors. Knowledge driven growth: physical goods exist at one place at a time and ideas can be used by everyone, new knowledge is not subject to diminishing marginal returns. One new idea may spawn several new ideas that lead to improvements in productivity. Improbability of wants incurring at the same time and place. Ex: a barber who is looking for a plumber to fix his sink: money solves the double coincidence of wants problem. Store of value: a convenient means of storing purchasing power. Unit of account: money can be used for account purchases even if it has no physical existence, gresham"s law.
