Econ 101b: Fall 2006: Handout: August 29 Lecture

Introduction to the Course, and Introduction to the Theory of Economic Growth

A few graphs:

• World income distribution and telephone usage 2005
• World income distribution and telephone usage 1975
• U.S. nonfarm employment, 1940-2006
• U.S. real GDP per worker, 1950-2006

A simple model, the Solow model, for analyzing an economy with labor L, capital K, and technology E...

• The Solow model assumes:
• The labor force grows at a constant proportional rate n
• The rate of improvement of "technology" is a constant proportional rate g
• Savings leads to investment of a fraction s of output Y in increasing the capital stock K
• A constant proportion delta of the capital stock K wears out each period.
• How much of the cross-country and cross-time pattern of economic growth can we explain with this simple model?
• Solow Model Handout

Course website: http://berkeley101bfall2006.vox.com/