Sei sulla pagina 1di 41

Economic

Growth
Growth and the business cycle

Short-run economic
growth and the
business cycle
Growth and the business cycle

Actual and potential


economic growth
Growth through making a fuller use of resources

x
Production inside
Food

the production y
possibility curve

O
Clothing
Growth in potential output
Food

Now

O
Clothing
Growth in potential output

5 years’ time
Food

Now

O
Clothing
Growth in potential and actual output
Food

O
Clothing
Growth in potential and actual output

y
x
Food

O
Clothing
Growth and the business cycle

The business cycle


The business cycle

Potential output
National output

3
4
2 Actual
3
output
4
2 1

O
Time
The business cycle

Potential output

Trend
National output

output

Actual
output

O
Time
Growth and the business cycle

The business cycle


in practice
Growth rates in selected industrial countries
10
UK
9
Annual growth rate (%)

8
7
6
5
4
3
2
1
0
-1
-2
Growth rates in selected industrial countries
10
UK
9
Annual growth rate (%)

8
7
6
5
4
3
2
1
0
-1
-2
Growth rates in selected industrial countries
10
UK
9 France
Annual growth rate (%)

8
7
6
5
4
3
2
1
0
-1
-2
Growth rates in selected industrial countries
10
UK
9 France
Annual growth rate (%)

8
7
6
5
4
3
2
1
0
-1
-2
Growth rates in selected industrial countries
10
UK Germany
9 France
Annual growth rate (%)

8
7
6
5
4
3
2
1
0
-1
-2
Growth rates in selected industrial countries
10
UK Germany
9 France
Annual growth rate (%)

8
7
6
5
4
3
2
1
0
-1
-2
Growth rates in selected industrial countries
10
UK Germany
9 France USA
Annual growth rate (%)

8
7
6
5
4
3
2
1
0
-1
-2
Growth rates in selected industrial countries
10
UK Germany
9 France USA
Annual growth rate (%)

8
7
6
5
4
3
2
1
0
-1
-2
Growth rates in selected industrial countries
10
UK Germany
9 France USA
Japan
Annual growth rate (%)

8
7
6
5
4
3
2
1
0
-1
-2
Growth rates in selected industrial countries
10
UK Germany
9 France USA
Japan
Annual growth rate (%)

8
7
6
5
4
3
2
1
0
-1
-2
Long-term economic growth

Long-term
economic growth
Long-term economic growth

UK economic growth
over the decades
UK GDP at market prices (1995=100)

120

110

100
Real GDP (1995 = 100)

90

80

70

60

50

40
UK GDP at market prices (1995=100)

120

110

100
Real GDP (1995 = 100)

90

80

70

60

50

40
Average annual percentage growth rate
in GDP per person employed
Output per person employed in 2000
relative to that in 1961
Productivity in selected countries, 1999 (UK = 100)

506789 EastWe
01234UKF rance
Long-term economic growth

A simple model of
economic growth
Economic growth

Long-term growth:
to steady-state
income
Output (Y), Investment (I), Depreciation (D) Steady-state output

Output (Y)

f
Y1

a Depreciation (D)
Y0

Investment (I)
g
I0
b
D0 c

O K0 K1
Capital stock (K)
Economic growth

Long-term growth:
an increase in
the saving rate
Effect of an increase in the rate of saving and investment
Output (Y), Investment (I), Depreciation (D)

m Y
Y2
f
Y1

n I2
h
I1
g

K1 K2
Capital stock (K)
Consumption An optimum saving rate

a b
O 100
Saving rate (%)
An optimum saving rate

m
C*
Consumption

a b
O s* 100
Saving rate (%)
Economic growth

Long-term growth:
technological
progress
Output (Y), Investment (I), Depreciation (D) Effect of embodied technological progress

p Y2
Y2
Y1

f
Y1
D

n I2
h
I1
g

K1 K2
Capital stock (K)
Effect of technological progress on growth rates

Higher rate
of technological
progress
Output

Lower rate
of technological
progress

Time
Effect of an increase in the saving rate,
with a given rate of technological progress

Steady-state
growth path 1
Output

Actual
growth path
Slope determined
by rate of
technological progress

Time
Effect of an increase in the saving rate,
with a given rate of technological progress
Steady-state
growth path 2

Steady-state
growth path 1
Output

Actual
growth path
Rate of saving
increases
at time t1

t1 Time

Potrebbero piacerti anche