Transcript Lecture 26: December 3, 2015 Outlook for World Economic Growth

Economics 1490
GROWTH AND CRISIS IN THE
WORLD ECONOMY
with
Professor Dale W. Jorgenson
Lecture 26: December 3, 2015
Outlook for World Economic Growth
Harvard University Department of Economics -- Fall 2015
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Course Outline
A. Introduction
B. U.S. Financial and Economic Crisis.
C. Europe and the U.S.: Convergence and
Divergence.
D. Asian Economic Miracles.
E. Sustainability of Economic Growth.
F. Outlook for the World Economy.
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Outlook for World Economic Growth
26. Potential and Actual Growth.
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Lecture 26 : December 3, 2015
The Sources of Growth
THE SOURCES OF ECONOMIC GROWTH
Comparisons among Regions and Countries
Sources of Growth in Capital Input
Information Technology and Non-Information Technology
Labor Input and Labor Quality
Total Factor Productivity
Lecture 26 : December 3, 2015
The Sources of Growth
MODEL OF PRODUCTION:
Production Possibility Frontier.
wI ,t  ln I t  wC ,t  ln Ct  vK ,t  ln K t  vL ,t  ln Lt   ln At
where:
I - Investment
C – Consumption
wI , wC  Shares of Investment, Consumption
K – Capital
L – Labor
vK , vL  Shares of Capital, Labor
A - Total Factor Productivity (TFP)
Lecture 26 : December 3, 2015
The Sources of Growth
Sources of World Economic Growth
Average annual growth rates, weighted by the income share.
Lecture 26 : December 3, 2015
The Sources of Growth
Sources of World Economic Growth
Annual percentage growth rates
Lecture 26 : December 3, 2015
The Sources of Growth
Sources of G7 Economic Growth
Annual percentage growth rates
Lecture 26 : December 3, 2015
The Sources of Growth
Sources of Growth for Developing and Transition Economies
Annual percentage growth rates
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Projecting Growth of the U.S. and the
World Economy
Hours Worked from Labor Force Projections;
Labor Quality from Projections of Educational Attainment
Productivity Growth from Production Possibility Frontier:
IT and Non-IT Productivity Growth, Capital Quality, and the
Gap between Growth of Output and Capital
GDP Growth Is the Sum of Growth in
Hours Worked and Productivity Growth
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Range of World Output Projections
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
SOURCES OF AVERAGE LABOR PRODUCTIVITY GROWTH
 ln yt  vK ,t  ln kt  vL,t ( ln Lt   ln H t )   ln At
where:
y = Y/H - Output per Hour Worked (ALP).
k = K/H - Capital Input per Hour Worked.
•CAPITAL DEEPENING: growth of capital input per hour
worked, weighted by the share of capital.
•LABOR QUALITY GROWTH: growth of labor input per
hour worked, weighted by the share of labor.
•TOTAL FACTOR PRODUCTIVITY.
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Range of World Output Projections
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Range of G7 Output Projections
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Range of Output Projections for
Developing and Transition Economies
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
OUTLOOK FOR THE WORLD ECONOMY: SUMMARY.
Medium-Term Outlook for the World Economy by the IMF.
The Transition to Sustainability.
Potential Growth of the World Economy.
Curb Your Enthusiasm.
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
MEDIUM TERM OUTLOOK FOR THE WORLD
ECONOMY
According to the IMF the world economy will return to the
high levels of growth of 2004-2008.
This will close most of the gap between potential and actual
growth.
Developing Asia, especially China and India, will grow very
rapidly, shrinking the gap between levels of GDP for
advanced and emerging economies.
The U.S. will continue to grow more rapidly than Europe
and Japan.
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
Lecture 26 : December 3, 2015
Outlook for World Economic Growth
MEDIUM TERM OUTLOOK
FOR THE WORLD ECONOMY
According to the IMF the world economy will return to the
high levels of growth of 2004-2008.
This will close most of the gap between potential and
actual growth.
Developing Asia, especially China and India, will grow
very rapidly, shrinking the gap between levels of GDP for
advanced and emerging economies.
The U.S. will continue to grow more rapidly than Europe
and Japan.
THANKS FOR BEING
SUCH A GREAT
CLASS!