中级宏观经济学试题-chapter 4

4.a. Chapter 4 suggests that the key to long-term economic growth is investment in human and physical capital with particular emphasis on research and development.
effects of capital investment. In other words, more investment not only leads to a higher and more
efficient capital stock but also to new ideas and new ways of doing things which can easily be copied
Solutions to the Problems in the Textbook
Conceptual Problems
1. Endogenous or self-sustained growth supposedly can be achieved by policies designed to affect the proportion of GDP that goes towards investment. The neoclassical growth model of Chapter 3 predicted that the long-term growth rate is determined only by population growth and technological progress and that changes in the savings rate have only transitory effects. The endogenous growth model, however, predicts that countries with a higher savings rate can achieve higher long-term growth and that a nation's government can affect the long-term growth rate by implementing policies that affect the savings rate.
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by others. This implies that a single firm does not necessarily reap all of the benefits of increased
capital investment and output, and therefore it becomes very difficult for that firm to dominate the
8.b. In an endogenous growth model, a lower population growth rate will increase a nation's long-term growth rate. The growth rate of per-capita output for an endogenous growth model was derived, as:
1
tends to support the notion of conditional convergence across countries.
6. Endogenous growth theory assumes that the steady-state growth rate of output is affected by the rate at which the factors of production are accumulated. Therefore, policies to stimulate the savings rate serve to increase the rate at which the capital stock is accumulated, which may, in turn, lead to a higher growth rate of output. While this notion may be important in explaining the growth rates of highly developed countries at the leading edge of technology, it cannot explain the differences in growth rates across poorer countries. For these countries, the notion of conditional convergence seems to be more applicable.
8.a. A country that is able to choose its rate of population growth through population control policies can shift the investment requirement down, thereby increasing the level of steady-state output. With a lower rate of population growth it is possible to achieve a higher level of income per capita with a lower level of investment spending. Therefore, implementing population control policies may be an effective way to escape the poverty trap.
4.b. (i) Investment tax credits may potentially affect economic growth in the long run by achieving a higher rate of technological progress. (ii) R&D subsidies and grants lead to technological advances that will have private and social returns. They are very effective in stimulating long-term economic growth. (iii) According to the endogenous growth model, policies designed to increase saving will increase the long-term growth rate of output. However, empirical evidence does not lend much support to this notion. (iv) Increased funding for primary education has large private and social returns and is therefore an excellent means to stimulate long-term growth. However, a major drawback is that it may take a long time until these policies have their full effect.
However, such a model ignores the possibility that, in addition to these internal (private) returns,
there are also external (social) returns to capital, that is, other firms can benefit from positive spillover
5. The notion of absolute convergence states that economies with the same savings rate and rate of population growth will reach the same steady-state equilibrium if they have access to the same technology. The notion of conditional convergence states that economies that have access to the same technology and the same rate of population growth but different savings rates will reach steady-state equilibria at a different level of output but have the same economic growth rate. Empirical evidence
market.
3. In the neoclassical growth model, an increase in the savings rate does not increase the long-term growth rate of output. However, because of the short-run adjustment process, there is some transitional gain that will lead to a higher level of output per capita. The endogenous growth model, on the other hand, predicts that the government can influence the savings rate, which, in turn, will affect the long-term growth rate of output.