Economic Growth / Edition 2

Economic Growth / Edition 2

4.0 1
by Robert J. Barro, Xavier I. Sala-i-Martin
     
 

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ISBN-10: 0262025531

ISBN-13: 9780262025539

Pub. Date: 10/01/2003

Publisher: MIT Press

This graduate level text on economic growth surveys neoclassical and more recent growth theories, stressing their empirical implications and the relation of theory to data and evidence. The authors have undertaken a major revision for the long-awaited second edition of this widely used text, the first modern textbook devoted to growth theory. The book has been

Overview

This graduate level text on economic growth surveys neoclassical and more recent growth theories, stressing their empirical implications and the relation of theory to data and evidence. The authors have undertaken a major revision for the long-awaited second edition of this widely used text, the first modern textbook devoted to growth theory. The book has been expanded in many areas and incorporates the latest research. After an introductory discussion of economic growth, the book examines neoclassical growth theories, from Solow-Swan in the 1950s and
Cass-Koopmans in the 1960s to more recent refinements; this is followed by a discussion of extensions to the model, with expanded treatment in this edition of heterogenity of households. The book then turns to endogenous growth theory,
discussing, among other topics, models of endogenous technological progress (with an expanded discussion in this edition of the role of outside competition in the growth process), technological diffusion, and an endogenous determination of labor supply and population. The authors then explain the essentials of growth accounting and apply this framework to endogenous growth models. The final chapters cover empirical analysis of regions and empirical evidence on economic growth for a broad panel of countries from 1960 to 2000. The updated treatment of cross-country growth regressions for this edition uses the new Summers-Heston data set on world income distribution compiled through 2000.

Product Details

ISBN-13:
9780262025539
Publisher:
MIT Press
Publication date:
10/01/2003
Edition description:
second edition
Pages:
672
Product dimensions:
7.00(w) x 9.00(h) x 0.87(d)
Age Range:
18 Years

Table of Contents

Preface xv
Introduction 1(1)
The Importance of Growth
1(4)
Empirical Regularities about Economic Growth
5(4)
A Brief History of Modern Growth Theory
9(5)
Growth Models with Exogenous Saving Rates (The Solow--Swan Model)
14(45)
The Basic Structure
14(2)
The Neoclassical Model of Solow and Swan
16(22)
The Neoclassical Production Function
16(1)
The Fundamental Dynamic Equation for the Capital Stock
17(2)
The Steady State
19(1)
The Golden Rule of Capital Accumulation and Dynamic Inefficiency
19(3)
Transitional Dynamics
22(2)
Policy Experiments
24(1)
An Example: Cobb--Douglas Technology
25(1)
Absolute and Conditional Convergence
26(5)
Convergence and the Dispersion of Per Capita Income
31(1)
Technological Progress
32(4)
A Quantitative Measure of the Speed of Convergence
36(2)
Models of Endogenous Growth
38(14)
The AK Model
39(2)
Endogenous Growth with Transitional Dynamics
41(1)
Constant-Elasticity-of-Substitution Production Functions
42(4)
The Leontief Production Function and the Harrod--Domar Controversy
46(3)
Growth Models with Poverty Traps
49(3)
Appendix Proofs of Various Propositions
52(4)
Proof That Each Input Is Essential for Production with a Neoclassical Production Function
52(1)
Properties of the Convergence Coefficient in the Solow--Swan Model
53(1)
Proof That Technological Progress Must Be Labor Augmenting
54(1)
Properties of the CES Production Function
55(1)
Problems
56(3)
Growth Models with Consumer Optimization (The Ramsey Model)
59(37)
Households
60(7)
Setup of the Model
60(3)
First-Order Conditions
63(4)
Firms
67(3)
Equilibrium
70(1)
Alternative Environments
71(1)
The Steady State
72(2)
Transitional Dynamics
74(13)
The Phase Diagram
74(2)
The Shape of the Stable Arm
76(1)
Behavior of the Saving Rate
77(2)
The Paths of the Capital Stock and Output
79(1)
Speeds of Convergence
80(7)
Appendix 2A Log-Linearization of the Ramsey Model
87(2)
Appendix 2B Behavior of the Saving Rate
89(1)
Appendix 2C Proof That γk Declines Monotonically If the Economy Starts from k(0) < k*
90(2)
Problems
92(4)
The Open Economy, Finite Horizons, and Adjustment Costs
96(44)
An Open-Economy Version of the Ramsey Model
96(5)
Setup of the Model
96(2)
Behavior of a Small Economy's Capital Stock and Output
98(1)
Behavior of a Small Economy's Consumption and Assets
99(1)
The World Equilibrium
100(1)
The World Economy with a Constraint on International Credit
101(7)
Setup of a Model with Physical and Human Capital
101(1)
The Closed Economy
102(1)
The Open Economy
103(5)
Variations in Preference Parameters
108(2)
Economic Growth in a Model with Finite Horizons
110(9)
Choices in a Model with Finite Horizons
110(4)
The Finite-Horizon Model of a Closed Economy
114(2)
The Finite-Horizon Model of an Open Economy
116(3)
Adjustment Costs for Investment
119(8)
The Behavior of Firms
119(3)
Equilibrium with a Given Interest Rate
122(3)
Equilibrium for a Closed Economy with a Fixed Saving Rate
125(2)
Some Conclusions
127(1)
Appendix Overlapping-Generations Models
128(9)
Households
128(2)
Firms
130(1)
Equilibrium
130(1)
The Steady State
131(2)
The Golden Rule and Dynamic Efficiency
133(1)
Dynamics
134(1)
Altruism, Bequests, and Infinite Horizons
135(2)
Problems
137(3)
One-Sector Models of Endogenous Growth
140(31)
The AK Model
141(3)
Behavior of Households
141(1)
Behavior of Firms
141(1)
Equilibrium
142(1)
Transitional Dynamics
142(1)
Determinants of the Growth Rate
143(1)
A One-Sector Model with Physical and Human Capital
144(2)
Models with Learning-By-Doing and Knowledge Spillovers
146(6)
Technology
146(2)
Equilibrium
148(1)
Pareto Nonoptimality and Policy Implications
149(1)
A Cobb--Douglas Example
150(1)
Scale Effects
151(1)
Government and Growth
152(9)
The Public-Goods Model of Productive Government Services
152(6)
The Congestion Model of Productive Government Services
158(3)
Transitional Dynamics in an Endogenous Growth Model
161(5)
A Cobb--Douglas Example
161(3)
A CES Example
164(2)
Concluding Observations
166(1)
Appendix Conditions for Endogenous Growth in the One-Sector Model
167(2)
Problems
169(2)
Two-Sector Models of Endogenous Growth (With Special Attention to the Role of Human Capital)
171(41)
A One-Sector Model with Physical and Human Capital
172(7)
The Basic Setup
172(3)
The Constraint of Nonnegative Gross Investment
175(4)
Different Technologies for Production and Education
179(19)
The Model with Two Sectors of Production
179(3)
The Uzawa--Lucas Model
182(14)
The Generalized Uzawa--Lucas Model
196(1)
The Model with Reversed Factor Intensities
197(1)
Conditions for Endogenous Growth
198(2)
Summary Observations
200(1)
Appendix 5A Transitional Dynamics with Inequality Restrictions on Gross Investment in the One-Sector Model
201(3)
Appendix 5B Solution of the Uzawa--Lucas Model
204(4)
Appendix 5C The Model with Reversed Factor Intensities
208(2)
Problems
210(2)
Technological Change: Models with an Expanding Variety of Products
212(28)
Models with a Variety of Producer Products
213(18)
Production with a Fixed Number of Products
213(2)
Expansions in the Variety of Products
215(3)
Households and Market Equilibrium
218(2)
Determinants of the Growth Rate
220(1)
Pareto Optimality
220(3)
Erosion of Monopoly Power
223(3)
Romer's Model of Technological Change
226(5)
Models with a Variety of Consumer Products
231(6)
Varieties of Consumer Goods
231(5)
A Comparison of Consumer Variety with Producer Variety
236(1)
Concluding Observations
237(1)
Problems
238(2)
Technological Change: Models with Improvements in the Quality of Products
240(25)
Sketch of the Model
241(1)
Behavior of Firms
242(10)
Levels of Quality in the Production Technology
242(4)
The Incentive to Innovate
246(5)
The Behavior of the Aggregate Quality Index
251(1)
The Market Value of Firms
252(1)
Households and Market Equilibrium
252(2)
Innovation by the Leader
254(5)
The Leader as a Monopoly Researcher
255(2)
Research by Outsiders
257(2)
Pareto Optimality
259(3)
Summary Observations about Growth
262(1)
Problems
263(2)
The Diffusion of Technology
265(20)
A Leader-Follower Model
266(10)
Behavior of Innovators in the Leading Country
267(1)
Behavior of Imitators in the Follower Country
268(4)
Variations in the Cost of Imitation
272(2)
Empirical Implications for Convergence
274(2)
Mutual Invention and Imitation
276(1)
Foreign Investment
276(3)
Leapfrogging
279(2)
Summary Observations about Diffusion and Growth
281(1)
Problems
281(4)
Labor Supply and Population
285(45)
Migration in Models of Economic Growth
285(23)
Migration in the Solow--Swan Model
286(8)
Migration in the Ramsey Model
294(6)
The Braun Model of Migration and Growth
300(8)
Fertility Choice
308(13)
An Overlapping-Generations Setup
309(2)
The Model in Continuous Time
311(10)
Labor/Leisure Choice
321(5)
Appendix 9A The Form of the Utility Function with Consumption and Work Effort
326(2)
Problems
328(2)
Data on Economic Growth, Growth Accounting
330(52)
Panel Data for Countries
330(2)
Long-term Data on GDP
332(9)
Regional Data Sets
341(5)
Data for U.S. States
341(1)
Data for European Regions
342(2)
Data for Canadian Provinces
344(1)
Data for Japanese Prefectures
345(1)
Growth Accounting
346(36)
General Setup
346(1)
Discrete Time and Variable Shares
347(1)
Measuring Input Shares and the Growth Rates of Inputs
348(2)
Results from Growth Accounting
350(1)
Extensions to Include R&D
351(1)
Limitations of Growth Accounting
352(30)
Empirical Analysis of Regional Data Sets
382(32)
Two Concepts of Convergence
383(4)
Convergence across the U.S. States
387(6)
β Convergence
387(5)
Measurement Error
392(1)
σ Convergence
392(1)
Convergence across Japanese Prefectures
393(5)
β Convergence
393(4)
σ Convergence across Prefectures
397(1)
Convergence across European Regions
398(3)
β Convergence
398(2)
σ Convergence
400(1)
Migration across the U.S. States
401(3)
Migration across Japanese Prefectures
404(3)
Migration across European Regions
407(3)
Migration and Convergence
410(3)
Conclusions
413(1)
Empirical Analysis of a Cross Section of Countries
414(104)
Losers and Winners from 1965 to 1985
415(5)
The Empirical Analysis of Growth Rates
420(4)
Effects from State Variables
421(1)
Control and Environmental Variables
422(2)
Regression Results for Growth Rates
424(22)
A Basic Regression
424(12)
Tests of Stability of Coefficients
436(1)
Additional Explanatory Variables
436(8)
World Bank Data on GDP
444(1)
Results from a Single Cross Section
445(1)
Sources of Growth for Slow and Fast Growers
446(5)
Empirical Analysis of the Investment Ratio
451(1)
Empirical Analysis of Fertility and Health
452(3)
Results for Fertility
453(1)
Results on Health
454(1)
Summary and Conclusions about Growth
455(7)
Appendix on Mathematical Methods
462(1)
Differential Equations
463(28)
Introduction
463(1)
First-Order Ordinary Differential Equations
464(7)
Systems of Linear Ordinary Differential Equations
471(20)
Static Optimization
491(7)
Unconstrained Maxima
491(1)
Classical Nonlinear Programming: Equality Constraints
492(2)
Inequality Constraints: The Kuhn--Tucker Conditions
494(4)
Dynamic Optimization in Continuous Time
498(12)
Introduction
498(1)
The Typical Problem
499(1)
Heuristic Derivation of the First-Order Conditions
500(3)
Transversality Conditions
503(1)
The Behavior of the Hamiltonian over Time
503(1)
Sufficient Conditions
503(1)
Infinite Horizons
504(1)
Example: The Neoclassical Growth Model
505(2)
Transversality Conditions in Infinite-Horizon Problems
507(1)
Summary of the Procedure to Find the First-Order Conditions
508(1)
Present-Value and Current-Value Hamiltonians
509(1)
Multiple Variables
510(1)
Useful Results in Matrix Algebra: Eigenvalues, Eigenvectors, and Diagonalization of Matrices
510(2)
Useful Results in Calculus
512(6)
Implicit Function Theorem
512(1)
Taylor's Theorem
513(1)
L'Hopital's Rule
514(1)
Integration by Parts
515(1)
Fundamental Theorem of Calculus
515(1)
Rules of Differentiation of Integrals
516(2)
References 518(11)
Index 529

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