ECON 1202 1st Edition Lecture 13 Outline of Lecture 12 (Measurement of Macroeconomic Data (continued))I. Types of UnemploymentII. Labor Market PoliciesIII. Labor Market PracticesIV. Natural Rate of UnemploymentV. Measurement of InflationVI. IssuesVII. Interest RatesOutline of Lecture 13 (Economic Growth)I. Why are some countries wealthy and others not?II. Why do growth rates matter?III. U.S. GrowthIV. China Growth V. What determines long-term economic growth?VI. What factors determine labor productivity?Economic GrowthI. Why are some countries wealthy and others not?a. “The Economic History of the Last 2,000 Years”i. World/country output is tied to world/country population1. India (1/3) and China (1/4) of population and share similar portions of the world output2. Until 1800, everyone used to be poora. Malthus and the Dismal Science: Malthusian TrapsII. Why do growth rates matter?a. Rule of 70i. Number of years to double=70/growth rateb. Growth rates are profoundly important over timeIII. U.S. Growtha. Real GDP per capita has risen about eight-fold since that start of the 20th century(trend)b. It has not risen consistently every year due to the business cycleIV. China Growth a. “China Growth Seen Slowing Sharply Over Decade”i. China’s growth rate will slow sharply during the coming decadeii. Why?1. Falling Productivity (more about this later on)a. Investments-“don’t have the pay off they once did”i. Less productivity bang for the investment bankb. Innovation shifi. Less technological changeV. What determines long-term economic growth?a. Income per capita (Y/pop) is driven by labor productivity (Y/L)b. A nation’s standard of living is determined by its ability to produce goods and services (GDP)c. Long run variations in countries’ standards of living is driven almost entirely by labor productivity (Y/LY/pop)VI. What factors determine labor productivity?a. Key determinants of productivity:i. Market and Production Organization (Level of Specialization)ii. Physical capital per workeriii. Human capital per workeriv. Technological knowledge/innovationv. Institutions (not always
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