AS.180.101 Lecture Notes - Lecture 10: Paul Krugman, Production Function, Creative Destruction
Document Summary
Lecture #10: long run economic growth: tech change, battles resource scarcity. Ae model only has output (one consideration how much output to produce: expectations with regard to inventories. Ad/as model prices and inflation: recall: we ignore prices in the ae model, but prices are what drive ad/as shifts/movements. Financial markets expectations are the essence of financial markets. Growth has been the rule over the past several hundred years. Technology and the entrepreneur, the antidote to the malthusian dilemma: thomas malthus. He is the reason why economists were called dismal scientists years back. He says that eventually we will run out of land because growing population will occupy it. As a consequence, the only thing that will contain population growth is starvation. What he got wrong was our productivity. Our ability to use the same inputs to produce more over time, we get smarter with how to use our inputs. In actuality, the fleet average went from .
