CAS EC 102 Lecture Notes - Lecture 7: Marginal Product, Absolute Convergence, Longrun

• School: Boston University
• Department: Economics
• Course: CAS EC 102
• Professor: Bruce Watson

Document Summary

Per labor hour production function & diminishing returns. The relationship between real gdp per hour worked and capital per hour worked, holding the level of technology constant. If workers have little k, giving them more increases their productivity a lot. If workers already have a lot of k, giving them more increase productivity fairly little. Equal increases in capital per worker leads to diminishing increases in output per hour worked: new growth theory. A model of long-run economic growth that emphasizes that technological change is influenced by economic incentives and so is determined by the working of the market system. Said that the key to economic growth is the accumulation of knowledge capital: types of capital. Knowledge: body of intellectual resources that people can draw on to produce goods and services more efficiently: the ideas and techniques themselves. Physical capital is subject to decreasing returns. Knowledge capital is subject to increasing returns.