Irakasgaiaren azalpena eta testuingurua

The Growth and Development course provides Master EAP students with the basic tools to analyze the causes of the observed differences in GDP per capita across countries.

Background requirements include basic knowledge about: (i) dynamic optimization, (ii) general equilibrium, (iii) calibration, (iv) descriptive statistics and (v)STATA and MATLAB.

Knowledge attainment of these specific requirements is achieved during the first two blocks (first quarter) of the master program. In particular, in the first block of the master program, during the mandatory course of Optimization, students review dynamic optimization. In the second block of the master program, during the mandatory course of Macroeconomics, students study the basic Neoclassical growth model (Ramsey-Cass-Koopmans model), make some calibration exercises and learn how to use MATLAB software; and during the mandatory course of Quantitative Methods, they learn how to use the STATA software.

The Growth and Development course is structured in four sections: (i) Data, (ii) Growth

theories, (iii) Accounting and (iv) A deeper analysis of TFP. Section I of the course starts by providing some relevant empirical facts: i) about historical data on growth of income per capita, and (ii) the observed differences in income per capita across countries over the last years.

Section II of this course gets deeper in the theoretical analysis of the main factors driving long-run positive growth. Firstly, Topic 2 introduces a neoclassical growth model augmented with human capital, the Mankiw, Romer and Weil (1992) model (MRW). The MRW model is able to explain the observed differences in the level of income per capita across countries. But, as in the case of the basic Neoclassical growth models studied in the course of Macroeconomics, the MRW cannot explain the observed differences in the long-run growth rate of income per capita across countries. In order to

explain differences in long-run growth of income per capita across countries, topics 3-6 focus on some seminal endogenous growth models. Endogenous growth models are characterized by the fact that the long-run growth rate of income per capita is endogenously determined by the characteristics of the economy and, therefore, there is room for economic policy recommendations to enhance long-run growth. Topic 3 considers the simplest endogenous growth model (the AK model). Topics 4-5 consider

more sophisticated endogenous growth models. Topic 4 focuses on the special characteristics of the technology, and how the price of patents is determined given that technological progress is endogenous, and it is produced by private firms that innovate. Topic 5 considers how the long-run growth rate of income per capita in a small open economy may differ from that of a closed economy.

Section III of the course focuses on growth accounting (to study the contribution of production factors and Total Factor Productivity in growth of income per capita of a given country) and level or development accounting (to study the contribution of production factors and Total Factor Productivity in the observed differences of income per capita across countries). The main finding is that differences in productivity is the most important factor in explaining differences in output per worker between developing and developed countries.

Finally, the aim of the last section is to make a deeper analysis of the aggregate TFP. In this Topic, if time permits, we briefly present some literature that focuses on understanding the underlying cause of low TFP in poor countries, such as differences in efficiency, rather than differences in technology, such as managerial practices, or differences in the type of distortions that may drive misallocation of resources.

Irakasgaia ikastean lortuko diren emaitzak

1. Provide a rational analysis of economic growth based on dynamic general equilibrium models (Neoclassical growth and endogenous growth models).

2. Provide the appropriate tools to study the contribution of each factor (production factor and TFP) to the observed cross-country differences in per capita income.

3. Identify the relevant factors of the observed cross-country differences in per capita income between developed and underdeveloped economies, and within underdeveloped economies.

4. Provide the appropriate tools to study the contribution of each factor (production factor and TFP) to the observed growth rate of GDP of a given country.

5. Identify the relevant factors of the observed cross-country differences in the long-run economic growth rate.

6. Identify simple economic policy recommendations to enhance the long-run growth rate of per capita income, based on the description of the economy.

Ohiko deialdia: orientazioak eta uko egitea

The evaluation system has three components:



(1) A homework showing student level of expertise in: (i) collecting historical cross-section data and carrying out an empirical analysis, (ii) solving growth models and obtaining their main empirical implications, (iii) evaluating the effects of economic policies on the long-run growth rate of income per capita of an economy, (iv) assessing the effects of trade policies in small open economies. The homework can be done in groups, but it has to be handed out individually. The homework has to be handed out at the due date. Assignments handed out after the deadline will not be graded. The weight of this homework in the final grade is 25%.



(2) Participation in class providing economic intuition and analytical resolution of some growth models is very much encouraged. Some of the questions can be answered immediately at class. Some others questions need some time to be answered. Students can do it individually or in groups. The weight of the participation in class represents 5% of the final mark.



(3) An exam at the end of the course, which weighs 70% of the final grade.

Ezohiko deialdia: orientazioak eta uko egitea

The evaluation system in the second call has two components:



(1) A homework showing student level of expertise in: (i) collecting historical cross-section data and carrying out an empirical analysis, (ii) solving growth models and obtaining their main empirical implications, (iii) evaluating the effects of economic policies on the long-run growth rate of income per capita of an economy, (iv) assessing the effects of trade policies in small open economies. The homework can be done in groups, but it has to be handed out individually. The homework has to be handed out at the due date. Assignments handed out after the deadline will not be graded. The weight of this homework in the final grade is 25%.



(2) A final exam which weighs 75% of the final grade.

Irakasgai-zerrenda

Topic 1.- Empirical evidence.

Topic 2.- Neoclassical growth models and Convergence Hypothesis.

Topic 3.- A simple endogenous growth model: The AK model.

Topic 4.- Technological Change and Economic Growth.

Topic 5.- Growth in a small open economy

Topic 6.- Growth Accounting and Level Accounting.

Topic 7.- Analyzing Aggregate Total Factor Productivity

Bibliografia

Nahitaez erabili beharreko materiala

Acemoglu, Daron, 2007a, "Introduction to Modern Economic Growth", Chapters 1 and 3.







Barro, Robert J. and Xavier Sala-i-Martin, Economic Growth, Second Edition (Cambridge: MIT Press, 2004), Chapters 1-3,4-6,10-12.







Weil, D.N., 2013, "Economic Growth”, Pearson Education Inc., Publishing as Addison-Wesley.

Oinarrizko bibliografia

Acemoglu, Daron; 2007a, "Introduction to Modern Economic Growth", Chapters 1 and 3.



Acemoglu, Daron;. 2007b, "Law, Politics and the Wealth of Nations: Lessons From History", Boston Club Meeting.



Acemoglu, Daron, 2009, "Persistence and Change in Institutions", Presentation.



Acemoglu, Daron; 2012a, "Success and Failure of Nations: Modeling Inefficient Institutions", Zeuthen Lectures.



Acemoglu, D. and J. Robinson, 2012b, "Why Nations Fail", FBBVA Lecture.



Barro, Robert J. and Xavier Sala-i-Martin, Economic Growth, Second Edition (Cambridge: MIT Press, 2004), Chapters 1, 2, 3, 4, 6, 10, 11 and 12.



Caselli, Francesco, 2005. "Accounting for Income Differences Across Countries." In Handbook of Economic Growth Volume 1A, ed. Philippe Aghion and Steven Durlauf, 679-741. New York: North-Holland.



Hall, Robert E. and Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?" Quarterly Journal of Economics 114(1): 83-116.



Hsieh, C., Klenow, P., 2010. ¿ Development accounting¿. American Economic Journal: Macroeconomics 2 (1), 207¿223.



Jones, Charles I., 2015, "The Facts of Economic Growth" National Bureau of Economic Research, Working Paper No. 21142.



Jones, Charles I. and P. Romer, 2010, ¿The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital¿, American Economic Journal: Macroeconomics, 2:1, 224¿245



Jones, Charles I. and P. J. Klenow, 2016, ¿Beyond GDP? Welfare across Countries and Time¿ American Economic Review, 106(9): 2426¿2457.



Kaldor, Nicholas, 1963, ¿Capital Accumulation and Economic Growth¿, In F.P. Lutz and D.C. Hague, eds., The theory of capital. New York: St. Martin¿s, pp. 177-222.



Levine, R. and D. Renelt, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions", The American Economic Review, Vol. 82, No.4: 942-963.



Lucas, Robert E. Jr., ¿On the Mechanics of Economic Development¿, Journal of Monetary Economics, July 1988, pp. 3-42.

Mankiw, G., D. Romer and D. Weil, 1992, ¿A Contribution to the Empirics of Economic Growth¿, Quarterly Journal of Economics, Vol. 107(2), pp. 407-437.



Prescott, E.C., 1997, "Needed: A Theory of Total Factor Productivity". Federal Reserve Bank of Minneapolis, Research Department Staff Report 242.



Romer, Paul M., 1990, ¿Endogenous Technical Change¿,. Journal of Political Economy, Vol. 98, pp. S71-S102.



Sala-i-Martin. X., 2006, "The State of the World", Notes.



Solow, Robert M., 1957. "Technical Change and the Aggregate Production Function". Review of Economics and Statistics, 39, August, 312--320.



Weil, D.N., 2013, "Economic Growth¿, Pearson Education Inc.,Publishing as Addison-Wesley.

Gehiago sakontzeko bibliografia

Barro, Robert J. and Jong-Wha Lee, 2000. "International Data on Educational Attainment: Updates and Implications," National Bureau of Economic Research Working Paper 7911.



Bloom, Nicholas and J.V. Reenen, 2010. "Why Do Management Practices Differ across Firms and Countries?", Journal of Economic Perspectives, 24(1), 203-224.



Bloom, Nicholas, R. Sadun and J. V. Reenen, 2016. "Management as Technology", Working Paper No. 16-133, Harvard Business School.





Hsieh, Chang-Tai and Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India." Quarterly Journal of Economics 124(4).



Jones, Charles I., 1995a, "Time Series Tests of Endogenous Growth Models," Quarterly Journal of Economics, 110, 495-525.



Jones, Charles I., 1995b, "R&D-Based Models of Economic Growth" Journal of Political Economy, 103, 759-784.



Jones, Charles I., 1999, "Growth: With or Without Scale Effects" American Economic Review, Vol. 89(2), 39-44.



McGrattan, Ellen R. and Schmitz, James A., 1998, ¿Explaining Cross-Country Income Differences.¿ Federal Reserve Bank of Minneapolis, and in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 10, pages 669-737 Elsevier.



Parente, Stephen and Prescott, Edward C., 2000, Barriers to riches. Cambridge, MA: MIT Press.



Parente, S.L. and E.C. Prescott , 1993,¿Changes in the Wealth of Nations¿, Quarterly Review, Federal Reserve Bank of Minneapolis.



Prescott, E.C., 1997, "Needed: A Theory of Total Factor Productivity". Federal Reserve Bank of Minneapolis, Research Department Staff Report 242.

Estekak

- Conference Board and Groningen Growth and Development Centre. Total Economy Database: http://www.conference-board.org/data/economydatabase/

- Heston, Alan; Summers, Robert and Aten, Bettina. Penn World Tables. Centre for International Comparisons of Production, Income and Prices at the University of Pennsylvania: http://pwt.econ.upenn.edu/

- Organization for Economic Cooperation and Development (OECD). The OECD STAN database. Paris: OECD: http://www.oecd.org/sti/industryandglobalisation/stanstructuralanalysisdatabase.htm