Economics 454

Economics 454: Economic Growth
Jeffrey Parker, Reed College
Fall 2005

Course Description
Topical Outline and Reading List

Course Description

Content

This course surveys modern theories and evidence about economic growth. This has been one of the most active areas of economic research in the last fifteen years. Most of what we study is from this recent literature.

Format

Because the class is very small, the format will be very open. Students will be expected to par-ticipate actively in discussions and in presentation of theoretical and empirical content.

Prerequisites

Economics 314 is the only prerequisite. Students will be expected to know growth theory at the level covered in Romer's text for that course.

Office Hours

The instructor will hold office hours on Mondays from 1:30 to 2:30, Tuesdays from 1:00 to 2:00 (with occasional exceptions), and Wednesdays from 10:00 to 11:00 in Vollum 229. If these times are not convenient, you may contact him via email or at extension 7308 to arrange an appointment.

Course Requirements

Exams: A mid-term and a final examination will be required. The mid-term will occur sometime near fall break. The final exam is scheduled for Wednesday, December 14, 9am-noon.
Homework: There will be some homework assignments throughout the course. Most will be traditional problem sets taken from the texts we read.

Grading

Grades will be based on all evidence of the student's knowledge of the subject matter. Students may demonstrate such knowledge through performance on exams, problem sets, and presentations, as well as through class participation and conversations with the instructor outside of class.

Texts and Other Readings

Much of modern growth theory has been collected in two main texts. We will cover most of Robert Barro and Xavier Sala-i-Martin's Economic Growth, 2nd ed., and part of Philippe Aghion and Peter Howitt's Endogenous Growth Theory. The last part of the course will feature extensive reading from the recent theoretical and empirical literature on growth.

Topical Outline and Reading List

Because this is an extremely small class, we may tailor the topical coverage to the interests of the students enrolled. The following readings cover the basics of economic growth. We may add material to some sections (or remove some) depending on student interest.

I. Economic Growth: Defining the Issues

Barro, Robert J., and Xavier Sala-i-Martin, Economic Growth, 2nd ed., Introduction.

II. Neoclassical Growth Theory

Barro and Sala-i-Martin, Chapters 1 through 3.

III. Endogenous Growth Models with Consumer Maximization

Barro and Sala-i-Martin, Chapters 4 and 5.

IV. Modeling Technological Progress

Barro and Sala-i-Martin, Chapters 6 through 8.

V. Neo-Schumpeterian Growth Models

Aghion, Philippe, and Peter Howitt, Endogenous Growth Theory, selected readings from Chapters 1, 2, 3, 5, and 6.

VI. Selected Recent Models

A. Models of Demographic Transition

Parente, Stephen L., and Edward C. Prescott, "Barriers to Technology Adoption and Development," Journal of Political Economy 102(2), April 1994, 298-321.
Hansen, Gary D., and Edward C. Prescott, "Malthus to Solow," American Economic Review 92(4), September 2002, 1205-17.
Ngai, L. Rachel, "Barriers and the Transition to Modern Growth," Journal of Monetary Economics 51(7), October 2004, 1353-83.
Galor, Oded, and Omer Moav, "Natural Selection and the Origin of Economic Growth," Quarterly Journal of Economics 117(4), November 2002, 1133-91. (Accessible online through library catalog.)

B. General-Purpose Technologies

Lipsey, Richard G., Cliff Bekar, and Kenneth Carlaw, "What Requires Explanation?" in E. Helpman, ed., General Purpose Technologies and Economic Growth, (Cambridge, Mass.: MIT Press, 1998), Chapter 2.
Helpman, Elhanan, and Manuel Trajtenberg, "A Time to Sow and a Time to Reap: Growth Based on General Purpose Technologies," in E. Helpman, ed., General Purpose Technologies and Economic Growth, (Cambridge, Mass.: MIT Press, 1998), Chapter 3.

VII. Empirical Studies of Growth

Durlauf, Steven N., and Danny T. Quah, "The New Empirics of Economic Growth," in Handbook of Macroeconomics, Volume 1A, ed. by J. Taylor and M. Woodford, (Amsterdam: Elsevier Science, 1999), 234-308. [Background reading: an excellent overview of empirical work on growth as of 1999.]

A. Growth Accounting

Fagerberg, Jan, "Technology and International Differences in Growth Rates," Journal of Economic Literature 32(3), September 1994, 1147-75. [Optional]
Barro and Sala-i-Martin, Chapter 10. [Read for 11/14 and 11/16.]
Maddison, Angus, Dynamic Forces in Capitalist Development: A Long-Run Comparative View, Chapter 3. [Read for 11/16.]
Jorgenson, Dale W., "Information Technology and the U.S. Economy," American Economic Review 91(1), March 2001, 1-32. [Read for 11/18.]
Oliner, Stephen, and Daniel Sichel, "Information Technology and Productivity: Where Are We Now and Where Are We Going?" Federal Reserve Bank of Atlanta Economic Review 87(3), 3rd Quarter 2002, 15-44. [Some will read for 11/18.]
Nordhaus, William D., "Productivity Growth and the New Economy," Brookings Papers on Economic Activity, 2002(2), 211-265. [Some will read for 11/18.]

B. Convergence or Divergence

Summers, Robert, and Alan Heston, "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950-1988," Quarterly Journal of Economics 106(2), May 1991, 327-368. [Read for 11/21.]
Abramovitz, Moses, "The Catch-Up Factor in Postwar Economic Growth," Economic Inquiry 28(1), January 1990, 1-18. [Read for 11/21.]
Barro and Sala-i-Martin, Chapter 11. [Read for 11/23.]
Pritchett, Lant, "Divergence, Big Time," Journal of Economic Perspectives 11(3), Summer 1997, 3-17. [Munro present 11/28.]
Bernard, Andrew B., and Steven N. Durlauf, "Convergence in International Output," Journal of Applied Econometrics 10(2), 1996, 97-108. [Gwati present 11/28.]
Quah, Danny, "Convergence Empirics across Economies with (Some) Capital Mobility," Journal of Economic Growth 1(1), March 1996, 95-124. [Armstrong present 11/28.]
Acemoglu, Daron, Simon Johnson, and James A. Robinson, "Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution," Quarterly Journal of Economics 117(4), November 2002, 1231-94. [Twieg present 11/28.]

C. Cross Country Growth Regressions

Barro and Sala-i-Martin, Chapter 12. [All read for 11/30.]
Kormendi, Roger, and Philip Meguire, "Macroeconomic Determinants of Growth: Cross-Country Evidence," Journal of Monetary Economics 16(2), September 1985, 141-163. [Optional, of historical interest.]
De Long, J. Bradford, and Lawrence Summers, "Equipment Investment and Economic Growth," Quarterly Journal of Economics 106(2), May 1991, 445-502. [Optional]
Shioji, Etsuro, "Public Capital and Economic Growth: A Convergence Approach," Journal of Economic Growth 6(3), September 2001, 205-227. [Twieg present 12/2.]
Murphy, Kevin M., Andrei Shleifer, and Robert W. Vishny, "The Allocation of Talent: Implications for Growth," Quarterly Journal of Economics 106(2), May 1991, 503-530. [Munro present 12/2.]
Levine, Ross, and David Renelt, "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review 82(4), September 1992, 942-963. [Gwati present 12/2.]
Sala-i-Martin, Xavier, "I Just Ran Two Million Regressions," American Economic Review 87(2), May 1997, 178-183. [Gwati present 12/2.]
Greenwood, Jeremy, Zvi Griliches, and Per Krusell, "Long-Run Implications of Investment-Specific Technological Change," American Economic Review 87(3), June 1997, 342-362. [Armstrong present 12/2.]
Mankiw, N. Gregory, David Romer, and David N. Weil, "A Contribution to the Empirics of Economic Growth," Quarterly Journal of Economics 107(2), May 1992, 407-437. [All read for 12/5.]
Casselli, Francesco, Gerardo Esquivel, and Fernando Lefort, "Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth 1(3), September 1996, 363-389. [Optional reading.]
Hall, Robert E., and Charles I. Jones, "Why Do Some Countries Produce So Much More Output Per Worker than Others?" Quarterly Journal of Economics 114(1), February 1999, 83-116. [All read for 12/5.]
Klenow, Peter J., and Andres Rodriguez-Clare, "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?" NBER Macroeconomics Annual 1997, 73-103. [All read for 12/5.]
Howitt, Peter, "Endogenous Growth and Cross-Country Income Differences," American Economic Review 90(4), September 2000, 829-846. [Optional reading.]

D. Empirical Tests of Endogenous Growth Models

Kremer, Michael, "Population Growth and Technological Change: One Million B.C. to 1990," Quarterly Journal of Economics 108(3), August 1993, 681-716. [All read for 12/7.]
Morrison, Catherine J., and Donald Siegel, "External Capital Factors and Increasing Returns in U.S. Manufacturing," Review of Economics and Statistics 79(4), November 1997, 647-654.[Optional reading.]
Evans, Paul, "Government Consumption and Growth," Economic Inquiry 35(2), April 1997, 209-217. [Optional reading.]
Klenow, Peter J., "Ideas versus Rival Human Capital: Industry Evidence on Growth Models," Journal of Monetary Economics 42(1), August 1998, 3-23. [All read for 12/7.]
Young, Alwyn, "A Tale of Two Cities: Factor Accumulation and Technical Change in Hong Kong and Singapore," NBER Macroeconomics Annual 7, 1992, 13-63. [All read for 12/7.]
Kocherlakota, Narayana R., and Kei Mu Yi, "A Simple Time Series Test of Endogenous vs. Exogenous Growth Models: An Application to the United States," Review of Economics and Statistics 78(1), February 1996, 126-134. [Optional reading.

Economics 454: Economic Growth Jeffrey Parker, Reed College Fall 2005