AS.180.101 Lecture Notes - Lecture 18: Nairu, Diminishing Returns, Real Interest Rate
Document Summary
Elements of macroeconomics october 31 lecture #18: exam review. Thomas malthus: economics= dismal science, his theory was that the world would suffer and humans would eventually starve and die because of population growth, but, malthus failed to account for productivity. Robert solo: came up with growth model for productivity; broke up productivity into 3 pieces: Or, a more skilled workforce (higher human capital) Capital deepening concept: north korea question on homework, you capital deepen only for so long, afterward, in the long run it is better machines (better technology and growth in labor force) Labor productivity growth is unlikely to grow so, so much in long term. Instead it has to be about invention rate of technical change for what determines economic growth in the long term is technological innovation. Malthus gives us law of diminishing returns; dismal science. Solo gives us a model that says we can do better because of productivity and because of technological innovation.
