ECON-002 Lecture Notes - Physical Capital, Longrun, Human Capital
Document Summary
Economic growth is measured using real gdp per capita. Growth rate = (gdp of 2014 - gdp of 2013)/gdp of 2013. If you know the growth rate and, for example, if the rate of growth between 2013 and. 2014 is 1. 3%, then to find the gdp in 2014, multiply the gdp in 2013 by 1. 013. In order to figure out the gdp over a longer period of time, say between 2009 and 2014 (a period of 5 years): gdp of 2014 = gdp of 2009 x (1. 013)^5. Rule of 70 - a mathematical formula that tells us how long it takes real gdp per capita, or any other variable that grows gradually over time, to double. Number of years for a variable to double = 70/annual growth rate of a variable. Small improvements in growth add up fast (the power of compounding. Labor productivity, often referred to simply as productivity, is output per worker.
