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Chapter19EconomicGrowth
TheEconomyintheLongRunEconomicGrowthSavingandCapitalFormationMoneyandPrices
LearningObjectivesShowhowsmalldifferencesingrowthratesleadtolargedifferencesinlivingstandardsExplainwhyGDPpercapitaisaveragelaborproductivitytimestheproportionofthepopulationemployedUsethistodiscussthesourcesofgrowthDiscussthedeterminantsofaveragelaborproductivityAnalyzedifferencesinGDPpercapitaacrosscountries
LearningObjectivesCompareandcontrastthebenefitsandcostsofeconomicgrowthDiscussandevaluategovernmentpoliciesthatpromotegrowthUnderstandthetrade-offsbetweeneconomicgrowthandenvironmentalquality
BenefitsofGrowthInthelate18thandearly19thcenturyLifeexpectancywas40yearsMostfamilieshad2or3childrendieNothingmovedfasterthanthespeedofahorseThebesthighwaywasfromBostontoNewYorkAstagecoachmadethe175-miletripin3daysPaceoftechnicalchangeisacceleratingInventionsarenotsufficienttocreategrowthProductsmustbecommercializedandsold
LivingStandardsUseaneconomicmodeltostudytheremarkableriseinlivingstandardsRealGDPpercapitaisameasureofthegoodsavailabletoatypicalpersonOnecluetogrowingprosperityinthe20thcentury–GDPpercapitaovertimehasroughlythesamepatternasoutputperworkerComparisonsacrosslongperiodsiscomplicatedbylackofdataThevariety,quantity,andqualityofgoodsincreasedenormouslyinthe19thand20thcentury
RealGDPperPerson,1870-2003(in2000USDollars)
RealGDPperCapita,1870-2003Country18701913195019792003US$2,936$6,366$11,484$22,567$34,875UK3,8996,0148,48116,09326,046Germany2,4202,8005,10618,41125,188Japan8351,5712,17614,91224,037Brazil9231002,1656,3367,205China5485714641,0764,970Ghana4648261,1871,2811,440
GrowthofRealGDPperCapita,1870-2003CountryAnnual%Change
1870–2003Annual%Change
1950–2003Annual%Change
1979-2003US 1.9% 2.1% 1.8%UK1.42.12.0German
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