Lectures 21: Technological Progress and Unemployment• Y = F(K,A N) … simplify to • Y = AN =>•N = Y/A• Does employment rise or fall with an increase in A? (Technological U – The Luddites -- France today)– The long run– The short runBack to AD/AS• Figure 13-1• In the short run, there could be insufficient demand…• Figure 13-2: Does Y grow more or less than A?• Empirical evidence: AmbiguousBack to Price and Wage Setting• Price settingP = (1+µ) W/A • Wage settingW = AePeF(u,z)Back to the Natural Rate• Natural: Expected = ActualPS: W/P = A/(1+µ)WS: W/P = AF(u,z)AF(un,z) = 1/(1+µ)Figure 13-4Sluggish A-expectations?Figure 13-5 (sluggish Ae?)Figure 13-6The US During the 1990s• Table 1 (page 276)• Figure 13-2Inequality• Tables 1 and 2 (page 279)• Figure
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