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   Course Title    Economic Growth
Lecturer    Kudebayeva Alma
Institution    The Kazakh State National University
Country    Kazakhstan


The purpose of the course

The course "Economic growth" is a compulsory course at the Economic faculty. The main goal of this course is to explain and investigate basic mathematical models of economic growth and reveal advantages and lacks of this or that model.

The list of necessary previous courses

Mathematical methods in economics, microeconomics, macroeconomics, econometrics.

Contents of the Course

Module 1

Introduction

The importance of economic growth. Empirical regularities of economic growth. A brief history of modern growth theory.

Lectures – 2 hours

Module 2

Growth models with exogenous saving rates (The Solow-Swan model)

The neoclassical production function. The fundamental dynamic equation for the capital stock. The steady state. The golden rule of capital accumulation and dynamic inefficiency. Transitional dynamics. An example: Cobb-Douglas Technology. The technological progress. The Solow – Swan model with labor – augmenting technological progress. Models of endogenous growth: AK model, The Leontief production function and the Harrod-Domar controversy, growth models with Poverty Traps.

Lectures – 8 hours

Independent work of the student – 2 hours

Seminars –6 hours

Module 3

Growth models with consumer optimization (The Ramsey model)

The households. First- order conditions. Euler equation. The consumption function. Firms. Equilibrium. Alternative environments. The Steady state. The phase diagram. The Shape of the stable arm. Behavior of the Saving Rate. The paths of the capital stock and output.

Lectures-4 hours

Seminars – 4hours

Module 4

Open economy

An open-economy version of the Ramsey model. Behaviour of a small economy‘s capital stock and output. Behaviour of a small economy‘s consumption and assets. The world equilibrium. Economic growth in model with finite horizons. The finite-horizon model of a closed economy. The finite – horizon model of an open economy. Adjustment costs for investment. Overlapping – generations models.

Lectures- 6 hours

Independent work of the student – 2 hours

Seminars – 6 hours

Module 5

One-sector models of endogenous growth

The AK model: behavior of households and firms, equilibrium, determinants of the growth rate. A one-sector model with physical and human capital. Models with learning-by doing and knowledge spillovers: technology, equilibrium, pareto non-optimality and policy implications, Cobb- Douglas example. Scale effects. The public-goods model of productive government services: decentralized economy, social planners problem, scale effects. The congestion model of productive government services.

Lectures- 6 hours

Independent work of the student – 2 hours

Seminars – 6 hours

Module 6

Two-sector models of endogenous growth.

The constraint of nonnegative Gross investment. Different technologies for production: the model with two sectors of production, Uzawa-Lucas model, generalized Uzawa-Lucas model, model with reversed factor intensities. Conditions for endogenous growth.

Lectures- 6 hours

Independent work of the student – 2 hours

Seminars – 6 hours

Module 7

The diffusion of technology

A leader-follower model. Behavior of innovators in the leading country. Behavior of imitators in the follower country. Variations in the cost of imitation. Mutual invention and imitation. The role of foreign investment in the process of technological diffusion.

Lectures- 4 hours

Seminars – 4 hours

Module 7

Empirical research on economic growth

Review of panel data for countries. Growth accounting. Measuring input shares and the growth rates of inputs. Empirical analysis of regional data sets. Two main concepts of convergence. Convergence across data of Kazakhstan. Use of computer package of the applied programs on econometrics for empirical investigation.

Seminars -2 hours

Laboratory works – 6 hours

Tasks for independent work of the student

  1. Proof that each input is essential for production with a neoclassical production function.
  2. Properties of the convergence coefficient in the Solow-Swan model.
  3. Proof that technological progress must be labor augmenting.
  4. Properties of the CES production function
  5. Overlapping – generations models
  6. Transitional dynamics in an endogenous growth model
  7. Conditions for endogenous growth in the one-sector model.
  8. Transitional dynamics with inequality restrictions on gross investment in the one-sector model.
  9. Solution of the Uzawa-Lucas model.
  10. The model with reversed factor intensities.

References

  1. Aghion P.,Howit P.(1998) Endogenous growth theory.694p,MIT,Press. Cambridge Mass.
  2. Barro, Robert J. (1991) A cross country study of growth, saving, and government, in B. Douglas Bernhein and John B. Shoven, eds., National saving and economic performance, Chicago, University of Chicago press.
  3. Barro, Robert J. (1993) Macroeconomics, fourth edition, New York, Wiley.
  4. Barro, Robert J.,Sala – i- Martin, Xavier (1995) Economic Growth , McGraw-Hill, Inc.
  5. Statistic review of basic data . (1999) ,Kazakhstan.


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