5. The Macroeconomics of Development - Readings
I will lecture for 1.5-3 periods, and then we will have a discussion on either Monday Sept 30.
- Chapter 3 in William EasterlyThe Elusive Quest for Growth: Economists Adventures and Misadventures in the Tropics (Cambridge, MA: MIT Press, 2002).
- Marginal Revolution University Videos on Growth, Capital Accumulation, and the Economics of Ideas
- Nordhaus (2000), “Do Real-Output and Real-Wage Measures Capture Reality?”
- NPR Planet Money Podcast: The History of Light, Nobel Edition "
- “Everything You Know About Cross-Country Convergence is Now Wrong”
- “Science Is Getting Less Bang for Its Buck”
- Freakonomics Radio: “Are We Running Out of Ideas?”
- Solow (1956), “A Contribution to the Theory of Economic Growth”
- Solow (1957), “Technical Change and the Aggregate Production Function”
- Pritchett (1997), “Divergence, Big Time”
- Romer (1990), “Endogenous Technological Change”
Questions to Guide Your Reading
Easterly accuses the Solow model of “capital fundamentalism.” What does he mean by this? How are (other) ideas about development and development policy affected by “capital fundamentalism?”
Easterly’s primary accusation against “capital fundamentalism” is that it is incompatible with “people respond to incentives.” How is this evident (or not) in the Solow model? The Romer model?
How do the events of the early to mid 20th Century (the Great Depression, industrialization and forced savings in the Soviet Union, etc) find their way into mid-century growth models?
If (physical, human, etc) capital is so important for growth, why can’t we just “send” capital to developing countries and watch them grow?
Consider the difference between “catch up growth” and “cutting-edge growth.” How does this explain the rapid growth of countries like Singapore, Hong Kong, China, South Korea, Taiwan, etc?
The U.S. is on the frontier, and fighting hard for “cutting-edge growth.” Do you think we “are running out of ideas” or that we are growing slowly because there are diminishing returns to innovation?