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Period I, 2000 prof. Benjamin Bental General Economic growth is a field that has been the subject of intensive research during the past decade. The emphasis of this effort was on “endogenous growth”, which results from the knowledge-acquisition actions of profit-seeking agents. These recent developments cannot be followed without a solid understanding of the basic Solow model. Accordingly, this course will start with a review and some extensions of the Solow model (presented in discrete time), with and without technical progress. It will then turn to the basic classes of endogenous growth models: the Romer model, quality-ladder models and “human-capital” models. Some ideas on R&D as a search process and their implications for economic growth will also be covered. There will be a formal homework once a week. Students are required to turn in their answers in the following week. The grades on the homework will constitute 25% of the final grade. The final exam weighs 75%. There will be no opportunity to take make-up exams. In case of a failing grade, students may take another exam. In such a case, the final grade will not exceed 3+. Books: Jones, Charles I.: Introduction to Economic Growth, W. W. Norton and Company, 1998. This book is technically very easy, and therefore not always complete. However, it is great in explaining the main issues and describing the most important empirical facts. Highly recommended! Aghion, Phillipe and Peter Howitt: Endogenous Growth Theory, The MIT Press, 1998. This is a very technical book, and surveys most of the relevant literature. Barro, Robert J. and Xavier Sala-I-Martin: Economic Growth, Mc-Graw Hill, 1995. A very good summary of the earlier contributions, both empirical and theoretical. Topics and Readings 1. The Basic Solow Model Solow, R. M.: "A Contribution to the Theory of Economic Growth", Quarterly Journal of Economics, 1956, 65-94. 2. Government and Growth in the Solow Model Atkinson, A. B. and J. E. Stiglitz: "Taxation and Debt in a Growing Economy", Lecture Eight in: Lectures on Public Economics, McGraw-Hill, 1980. 3. Exogenous Technological Improvements. 4. Assessments of the Solow Model Barro, R. J.: "Economic Growth in a Cross Section of Countries", Quarterly Journal of Economics, 1991, 407-43. Barro, R. J. and X. Sala-i-Martin: "Convergence", Journal of Political Economy, 1992, 223-51. Mankiw, N. G., D. Romer and D. N. Weil: "A Contribution to the Empirics of Economic Growth", Quarterly Journal of Economics, 1992, 407-38. Mankiw, N. G., "The Growth of Nations", Brookings Papers on Economic Activity, 1995, 275 – 326. 5. Endogenous Growth Models Romer, M. P.: "Increasing Returns and Long-Run Growth", Journal of Political Economy, 1986, 1002-37. : "Endogenous Technological Change", Journal of Political Economy, 1990, S71-S102. Lucas, R. E., Jr.: "On The Mechanics of Economic Development", Journal of Monetary Economics, 1988, 3-42. : "Making a Miracle", Econometrica, 1993. Grossman, Gene M. and E. Helpman: “Rising Product Quality” in: Innovation and Growth in the Global Economy, MIT Press, 1991. Helpman, E.: "Endogenous Macroeconomic Growth Theory", European Economic Review, 1992, 237-67. Jones, C. I., "Time Series Tests of Endogenous Growth Models", Quarterly Journal of Economics, 1995, 495 - 525. Bental, B. and D. Peled: "The Accumulation of Wealth and the Cyclical Generation of New Technologies: A Search Theoretic Approach", International Economic Review, 1996. McGrattan, Ellen R., “A Defense of the AK Model”, Federal Reserve Bank of Minneapolis Quarterly Review, Fall 1998.
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