Bài giảng Macro - Chapter 16 Economic growth & the new economy

Chapter 16ECONOMIC GROWTH & THE NEW ECONOMYSLIDES PREPARED BY JUDITH SKUCE, GEORGIAN COLLEGEIn this chapter you will learnAbout the ingredients of economic growthAbout production possibility analysisAbout Canada’s economic growth ratesAbout productivity growth and the new economyChapter 16 TopicsIngredients of GrowthProduction Possibilities AnalysisCanadian Economic Growth RatesAccounting for GrowthProductivity Growth & the New EconomyIs Growth Desirable & Sustainable?Ingredients of GrowthSupply Factorsnatural resourcesIngredients of GrowthSupply Factorsnatural resourceshuman resourcesIngredients of GrowthSupply Factorsnatural resourceshuman resourcescapital goodsIngredients of GrowthSupply Factorsnatural resourceshuman resourcescapital goodstechnologyIngredients of GrowthSupply Factorsnatural resourceshuman resourcescapital goodstechnologyDemand Factorhouseholds & businesses must purchase the economy’s outputEfficiency Factoreconomic efficiency & full employmentChapter 16 TopicsIngredients of GrowthProduction Possibilities AnalysisCanadian Economic Growth RatesAccounting for GrowthProductivity Growth & the New EconomyIs Growth Desirable & Sustainable?Production Possibilities AnalysisGrowth & Production PossibilitiesConsumer goodsCapital goodsBAEconomic growthFigure 16-1aDCbProduction Possibilities AnalysisLabour & Productivitysize of employed labour forceaverage hours of worklabour inputs (hours of work)technological advancequantity of capitaleducation & trainingallocative efficiencyotherlabour productivity (average output per hour)Real GDPX=Figure 16-2labour force participation rateProduction Possibilities AnalysisGrowth in the AD-AS ModelCapital goodsBAFigure 16-3DCConsumer goodsPrice levelReal GDPQ1ASLR1Q2ASLR2Long-Run AD - AS ModeloP1ASLR1Q1AD1AS1Long-run & short-run AS increase over timePrice Level© 2002 McGraw-Hill Ryerson Ltd.Macroeconomics, Chapter 1613Real GDPFigure 16-4oP1AS2Q2AD1AS1Size of AD shift determines inflationLong-Run AD - AS ModelASLR1ASLR2© 2002 McGraw-Hill Ryerson Ltd.Macroeconomics, Chapter 1614Q1Price LevelReal GDPFigure 16-4oP1AD2AD1P2AS2AS1ASLR1ASLR2Long-Run AD - AS Model© 2002 McGraw-Hill Ryerson Ltd.Macroeconomics, Chapter 1615Q2Real GDPQ1Price LevelFigure 16-4Chapter 16 TopicsIngredients of GrowthProduction Possibilities AnalysisCanadian Economic Growth RatesAccounting for GrowthProductivity Growth & the New EconomyIs Growth Desirable & Sustainable?Canadian Economic Growth RatesReal GDP in the last half century has increased over sixfoldGrowth particularly strong in the 1960s, but declined during the 1970s & 1980sYearGDP ($ billions, 1992)Population (millions)Per capita GDP192656.89.55,979192968.110.06,810193347.610.64,491193971.711.06,5181942110.911.59,6431946114.112.39,2761951143.014.010,2141956192.016.111,9251961220.818.212,1321966299.720.014,9851971370.921.617,1711976470.323.020,4481981551.324.322,6871986628.625.424,7481991692.227.025,6371997815.830.226,9872000921.530.730,016Table 16-1© 2002 McGraw-Hill Ryerson Ltd.Macroeconomics, Chapter 1618Chapter 16 TopicsIngredients of GrowthProduction Possibilities AnalysisCanadian Economic Growth RatesAccounting for GrowthProductivity Growth & the New EconomyIs Growth Desirable & Sustainable?Accounting for GrowthPost-1950 productivity growth greater than can be attributed to increases in labour & capitaltotal factor productivity (TFP) has increasedAccounting for GrowthInputs Versus Productivityproductivity growth has been a significant force in the growth of real GDPproductivity growth slowed from the mid-1970s to early 1990sAccounting for GrowthQuantity of Labourboth population & labour force have increasedAccounting for GrowthTechnological Advanceprocess innovationproduct innovationAccounting for GrowthQuantity of Capitalalmost 45% of the annual growth of real output since 1961 is attributable to increases in the quantity of capitalpublic investment in infrastructure also importantAccounting for GrowthEducation & Trainingeducational attainment has increasedconcerns about qualityAccounting for GrowthResource Allocation & Scale Economieseconomies of scaleimproved resource allocationlabour shifts from agriculture to manufacturingAccounting for GrowthResource Allocation & Scale Economieseconomies of scaleimproved resource allocationlabour shifts from agriculture to manufacturingdecline in discriminationAccounting for GrowthResource Allocation & Scale Economieseconomies of scaleimproved resource allocationlabour shifts from agriculture to manufacturingdecline in discriminationliberalized tradeAccounting for GrowthOther Factorsthe social-cultural-political environment has fostered growthmarket systemstable political systemChapter 16 TopicsIngredients of GrowthProduction Possibilities AnalysisCanadian Economic Growth RatesAccounting for GrowthProductivity Growth & the New EconomyIs Growth Desirable & Sustainable?Productivity Growth & the New EconomyCharacteristics of the New EconomyThe Microchip & Information TechnologyNew Firms & Increasing Returnsmore specialized inputsspreading of development costssimultaneous consumptionnetwork effectslearning-by-doingProductivity Growth & the New EconomyCharacteristics of the New EconomyThe Microchip & Information TechnologyNew Firms & Increasing ReturnsGlobal CompetitionMacroeconomic ImplicationsFaster, Non-Inflationary GrowthLow Natural Rate of UnemploymentGrowing Tax RevenuesProductivity Growth & the New EconomySkepticism about the New EconomyChapter 16 TopicsIngredients of GrowthProduction Possibilities AnalysisCanadian Economic Growth RatesAccounting for GrowthProductivity Growth & the New EconomyIs Growth Desirable & Sustainable?Is Growth Desirable & Sustainable?The Antigrowth Viewenvironmental costsdistribution vs productionsustainabilityIs Growth Desirable & Sustainable?In Defense of Economic Growthhigher living standardsgrowth enables societal improvementsworking conditions have improvedlimiting growth not the solution to environmental problemsgrowth is sustainableChapter 16 TopicsIngredients of GrowthProduction Possibilities AnalysisCanadian Economic Growth RatesAccounting for GrowthProductivity Growth & the New EconomyIs Growth Desirable & Sustainable?