Measuring the

standard of living

Pertemuan 5
Measuring the standard of living
•Output per person is also called per
capita. Given that output and income
are always equal, it is also called
income per person, or income per
capita
•The bottom line: when comparing
standard of living across countries,
make sure to purchasing power parity This Photo by Unknown author is licensed under CC BY.

(PPP).
Growth in rich countries since
1950

1. The
large increase in the
standard of living since 1950
2. Theconvergence of output
per person since 1950

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 The evolution of output per person in four
rich countries since 1950

Annual growth rate output per person (%) Real output per person (2000 dollars)

Countries 1950 – 2004 1950 2004 2004/1950

France 3.3 5920 26168 4.4

Japan 4.6 2187 24661 11.2

UK 2.7 8091 26762 3.3

US 2.6 11233 36098 3.2

Average 3.5 6875 28422 3.9

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Thinking about growth: a
primer

1. The aggregate production function

2. Returns to scale and returns to
factors
3. Output per worker and capital per
worker
4. The sources old growth

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The effects of capital on output
The effects of 1. We
derive the relation between output
output on capital and investment
accumulation 2. Wederive the relation between
investment and capital accumulation

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The implications of alternative
saving rates

1. Dynamics of capital and output

2. Steady – state capital and output
3. The saving rate and output
4. The
saving rate and
consumption

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Getting a sense of
magnitudes

Check that this production

function exhibits both constant
returns to scale and decreasing
returns to either capita or
labor.

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 "APA PUN KATA
ORANG LAIN,
BELAJAR DAN
BEKERJA
KERASLAH UNTUK
MENCAPAI
KESUSKSESAN"
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