ECON10020 Principles of Macro Topic 2 Tech, Pop and Growth 202425 BRTSPC

UCD Ireland’s Global University - Principles of Macroeconomics

Overview of Course

  • Course Code: ECON10020

  • Instructor: Dr. Alan de Bromhead

  • Focus: Technology, Population, and Growth

    • Unit Duration: 2024-25

Recap of Unit 1

  • Key Transformations: Living standards have improved significantly over recent centuries, albeit unevenly, leading to increased inequality both within and between countries.

  • Capitalism's Role: Defined by private property, markets, and firms as critical factors.

  • Growth Drivers: Technological progress and specialization are primary growth drivers but come with environmental implications.

Unit 2: Technology, Population and Growth

  • Motivations Behind the Study: Understanding economic models and their implications for population and technology.

  • Models Covered in This Unit:

    • Malthusian Model

    • Allen’s Model

Economic Models

  • Purpose of Economic Models:

    • Simplify complex interactions among individuals, firms, and governments.

    • Assist in predicting economic outcomes based on assumptions.

    • Enhance communication regarding economic theories.

  • Characteristics: Models clarify actions, interactions, and outcomes, based on equilibrium, and depict how changes affect these conditions.

The Malthusian Model

Key Concepts

  • Stagnant Living Standards: According to Thomas Malthus, population growth leads to diminishing returns in income, forcing living standards to subsist near a minimum level.

  • Population Dynamics:

    • Higher living standards initially contribute to increased family sizes.

    • Ultimately, as living standards rise, population also rises, maintaining income at subsistence levels.

  • Technological Impact: Technological advancements can increase the population but don’t inherently lead to higher living standards.

Escape from the Malthusian Trap

  • Transitioning from stagnation requires technological advancements to outpace population growth, altering the Malthusian equilibria.

Allen Model of Technological Change

Framework for Technological Innovation

  • Structure: Addresses labor and coal as primary production inputs for generating cloth.

  • Decision-Making in Firms: Firms will select production technologies based on cost minimization, influenced by input prices and resource availability.

  • Relative Prices: Changes in relative prices of inputs can trigger shifts in technology use and innovation incentives.

  • Innovation Rents: High relative wages in the British context promoted the adoption of innovative technologies, leading to the Industrial Revolution.

  • Creative Destruction: Dynamics of competition drive innovation, leading to advances in productivity and economic growth.

Conclusion and Future Topics

  • Recap highlights the importance of understanding economic models to grasp complexities of economic behavior, specifically how they elucidate the historical transformations of living standards and economic growth.

  • Upcoming Units will focus on Labor Market Dynamics, including wage-setting behaviors and the economic implications of government policies on unemployment.