Matthias Doepke - Marcroeconomics - Chapter 15,16 pot

... production function equa- tion (11.1) exhibits constant returns to scale, which means that if we double both inputs, output also doubles. Our choice of a constant-returns-to-scale production function ... with 1 See Chapter 1 for a discussion of growth rates and how to compute them. Chapter 11 Economic Growth This chapter examines the determinants of economic growth. A startling fact abo...

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... worker Table 15.4: Notation for Chapter 15 15.1 Two Workers under Autarky 175 Substituting all the constraints into the objective yields: max 1 Taking the first-order condition with respect to ... a thought ex- periment. First we suppose that the relative price of wine is very low. Then we ask what happens as the relative price rises. When is very low, both will make beer be- cause the ... r...

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... Cycles Technology shocks: Real-world production functions change over time. New tech- nologies like computers or robots alter the production process and raise overall pro- ductivity. Sometimes, production ... computers. Monetary shocks: We saw in Chapter 8 on inflation that there are real effects of mon- etary policy. Therefore random changes to money supply or interest rates are a po- tenti...

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... war steady-state, but the relatively short duration of the war prevents it from ever reaching that steady-state. After the war the econ- omy transitions slowly back to its pre-war steady-state. ... fully discuss tax policy, for this chapter we will assume that the gov- ernment levies a very special kind of tax: a lump-sum tax. That is, the government an- nounces a spending plan and then ......

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