ECON DEVELOPMENT

Harrod-Domar Model

g=(s/v)-d

What does the Harrod-Domar Model measure?

GDP growth rate

In the Harrod-Domar Model, what does s represent?

Savings rate

In the Harrod-Domar Model, what does v represent?

Capital-output ratio

In the Harrod-Domar Model, what does d represent?

Depreciation

In the Harrod-Domar Model, what does n represent?

Population growth

In the Harrod-Domar Model, how do we calculate GDP per capita?

GDP per capita=g_y-n

In the Harrod-Domar Model, how do we find a financing gap?

Financing gap=(S rate needed)-(Current savings rate)

In the Solow model, what function represents how much investment is needed to keep capital per worker unchanged?

(n+d)k

In the Solow Model, what function represents output/income per worker?

Y=f(k)

In the Solow model, what function represents savings per worker at each level of capital?

S_y

What does the Gini coefficient measure?

Income inequality within a country

What information does the Lorenz curve provide about income distribution?

Shows how the share of total income is received by cumulative percentages of the population. Shows how equal income is distributed.

What is the Growth Accounting Equation?

g_y=g_kw_k+g_lw_l+a

In the Growth Accounting Equation, what does g_y represent?

GDP growth rate

In the Growth Accounting Equation, what does g_k represent?

Capital growth

In the Growth Accounting Equation, what does w_k represent?

Capital investment

In the Growth Accounting Equation, what does g_l represent?

Labor growth

In the Growth Accounting Equation, what does w_l represent?

Labor investment

In the Growth Accounting Equation, what does a represent?

Residual

In the Growth Accounting Equation, what is the residual?

Total factor productivity growth

How do you calculate GDP per capita?

GDP per capita=Y/L

In the GDP per capita equation, what does Y represent?

Real GDP

In the GDP per capita equation, what does L represent?

Quantity of labor