Economic Growth: Theory and Policy (Timo Boppart s part)

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1 Economic Growth: Theory and Policy (Timo Boppart s part) Lecturer: Timo Boppart Stockholm University, PhD Program in Economics Q4, March/April, General Information This part of the course consists of four three-hour lectures covering advanced topics in economic growth. The aim of the course is to learn the tools and building blocks of modern growth theory with a special emphasize of multi-sector models. Generally, theories of growth, innovation and technical change are interrelated to many research questions in development, environmental economics, economic history, political economy and labor economics. The course should prepare students with tools and the theoretical knowledge to understand and apply modern theories of economic growth. It is a theoretical course. However, empirical facts will be emphasized and empirical tests of the models predictions will be illustrated. The meetings will be held on: March 23, March 25, April 7, April 13, The second part of the course is taught by Philippe Aghion. The bibliography contains journal articles, Handbook chapters as well as the two textbooks: Acemoglu D. (2009) Introduction to Modern Economic Growth, Princeton University Press, Princeton NJ. Aghion P. and P. Howitt (2009) The Economics of Growth, MIT Press, Cambridge MA. 1

2 2 Lecture Material Lecture 1: Neoclassical Growth Theory Growth theory is motivated. We start with a refresh of the foundations of neoclassical growth theory. We discuss Kaldor s stylized facts of economic growth, Hicks/Harrod/Solow neutral technical change, growth regressions, convergence, growth accounting and growth in the very long run. Acemoglu (2009), Chapters 1, 2, & 8. Aghion P. and P. Howitt (2009), Chapters 1, 5, 7 & 10. Barro, R. J. and X. Sala-i-Martin (1992), Convergence Journal of Political Economy, Caselli F. (2005), Accounting for Income Differences across Countries, in Handbook of Economic Growth (P.Aghion and S.Durlauf eds.). North Holland. Galor O. (2005), From Stagnation to Growth. Unified Growth Theory. Handbook of Economic Growth Volume 1A. Edited by Philippe Aghion and Steve Durlauf, Galor O. and O. Moav (2002), Natural Selection and the Origin of Economic Growth, Quarterly Journal of Economics, 117, Galor O. and O. Moav (2006), Das Human-Kapital: A Theory of the Demise of the Class Structure, Review of Economic Studies, 73, Kaldor, N. (1961). Capital Accumulation and Economic Growth, In The Theory of Capital: Proceedings of a Conference of the International Economic Association, edited by Friedrich A. Lutz and Douglas C. Hague. London: Macmillan. Lucas R. (2003), Macroeconomic Priorities, American Economic Review, 93(1), Gancia G., A. Müller and F. Zilibotti (2011), Structural Development Accounting, Forthcoming in Advances in Economics and Econometrics: Theory and Applications (Tenth World Congress of the Econometric Society), D. Acemoglu, M. Arellano and E. Dekel (eds.), Cambridge University Press. Sala-i-Martin, X. (1997), I just ran two million regressions, The American Economic Review, Uzawa, H. (1961), Neutral inventions and the stability of growth equilibrium, Review of Economic Studies, 28,

3 Lecture 2: Endogenous Growth AK model and the expanding variety model is discussed. Schumpeterian Growth is left aside for the second part of the course. Acemoglu (2009), Chapters Aghion P. and P. Howitt (2009), Chapters 2 & 3. Aghion P. and P. Howitt (1992), A Model of Growth through Creative Destruction, Econometrica, 60(2), Aghion, P. and P. Howitt (2005), Growth with quality-improving innovations: an integrated framework, Handbook of economic growth, 1: Jones, C. (1995). R & D-Based Models of Economic Growth, Journal of Political Economy, 103(4), Romer P. (1990), Endogenous Technical Change, Journal of Political Economy 98, Rebelo, S. (1991). Long-Run Policy Analysis and Long-Run Growth, Journal of Political Economy, 99(3), Lecture 3: Structural Change Engel s law and Baumol s cost disease are discussed. Empirical facts are illustrated. Different theories that reconcile structural change on a sectoral level with balanced growth on the aggregate are outlined. The two drivers of structural change income and substitution effects are emphasized. Overview and survey articles Acemoglu (2009), Chapter 20. Herrendorf, B., Rogerson, R. and Valentinyi, A.(2013). Growth and Structural Transformation, In preparation for the Handbook of Economic Growth. Kuznets, S.(1957). Quantitative Aspects of the Economic Growth of Nations II: Industrial Distribution of National Product and Labor Force, Economic Development and Cultural Change, 5(4),

4 Matsuyama, K. (2008), Structural change, The New Palgrave Dictionary of Economics, Second Edition, Eds. Steven N. Durlauf and Lawrence E. Blume, Palgrave Macmillan. Engel s law Browning, M. (2008). Engel s Law, The New Palgrave Dictionary of Economics, Second Edition, Palgrave Macmillan. Engel, E. (1857). Die Productions- und Consumptionsverhaeltnisse des Koenigsreichs Sachsen, Zeitschrift des Statistischen Bureaus des Königlich Sächsischen Ministeriums des Inneren, No. 8 and 9. Houthakker, H. S. (1957). An International Comparison of Household Patterns, Commemorating the Century of Engel s Law, Econometrica, 25(4), Baumold s cost disease Baumol, W. (1967). Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis, American Economic Review, 57(3), Reconciling structural change with balanced growth Boppart, T. (2011). Structural change and the Kaldor facts in a growth model with relative price effects and non-gorman preferences, Econ working paper No. 2, Department of Economics, University of Zurich. Foellmi, R. and Zweimueller, J. (2008). Structural Change, Engel s Consumption Cycles and Kaldor s Facts of Economic Growth, Journal of Monetary Economics, 55(7), Kongsamut P., Rebelo S. and Xie, D. (2001), Beyond Balanced Growth, Review of Economic Studies, 68, Ngai R. and Pissarides, C. (2007), Structural Change in a Multi-Sector Model of Growth, American Economic Review, 97, Other papers and applications Acemoglu D. and Guerrieri, V. (2008), Capital Deepening and Nonbalanced Economic Growth, Journal of Political Economy, 116, Buera, F. and Kaboski, J. P. (2012). The Rise of the Service Economy, American Economic Review, 102(6), Echevarria, C. (1997). Changes in Sectoral Composition Associated with Economic Growth, International Economic Review, 38(2), Gollin, D., Parente, S. and Rogerson, R. (2002). The Role of Agriculture in Development, American Economic Review, 92(2),

5 Herrendorf, B., Rogerson, R. and Valentinyi, A. (2013). Two Perspectives on Preferences and Structural Transformation, American Economic Review, forthcoming. Laitner, J. (2000). Structural Change and Economic Growth, Review of Economic Studies, 67(232), Matsuyama, K. (1992). Agricultural Productivity, Comparative Advantage, and Economic Growth, Journal of Economic Theory, 58(2), Matsuyama, K. (2002). The Rise of Mass Consumption Societies, Journal of Political Economy, 110(5), Voigtlaender N. and J. Voth, (2012), The Three Horsemen of Riches: Plague, War and Urbanization in Early Modern Europe, Review of Economic Studies, forthcoming. Zweimueller, J.(2000). Schumpeterian Entrepreneurs Meet Engel s Law: The Impact of Inequality on Innovation-Driven Growth, Journal of Economic Growth, 5(2), Lecture 4: Directed Technical Change Theory of directed technical change and some of its applications are discussed. Acemoglu (2009), Chapter 15 Aghion P. and P. Howitt (2009), Chapter 8. Acemoglu D. (2002), Directed Technical Change, Review of Economic Studies, 69, Acemoglu D., P. Aghion, L. Bursztyn and D. Hemous, (2012), The Environment and Directed Technological Change, American Economic Review, 102(1), Acemoglu, D., and F. Zilibotti (2001), Productivity Differences Quarterly Jourournal of Economics, Gancia G. and F. Zilibotti (2009), Technological Change and the Wealth of Nations, Annual Reviews of Economics, 1, Popp D. (2002), Induced Innovation and Energy Prices, American Economic Review, 92(1),

DEEP ORIGINS OF COMPARATIVE ECONOMIC DEVELOPMENT

DEEP ORIGINS OF COMPARATIVE ECONOMIC DEVELOPMENT Instructor: Dr. Dmitry Veselov (dveselov@hse.ru) From plus.google.com COURSE DESCRIPTION Abstract This course summarizes recent theoretical and empirical