Greg Clark Modern Economic Growth I

Greg Clark
Modern Economic Growth I

Gy = aGk + Ga

capital accumulation per ouput explains about 1/4 of ouptut increase.

Ga - growth rate of efficiency. the residual explains the rest (3/4). --> Solow.



After that

Gy = akGk + ahGh + Ga

1). Human Capital (0.26). It takes a great deal of investment on educating high-skilled workers. Earnings are given off.

It does reduces the residual but still residul is the biggest. However, the problem is that growth rate of capital is 1.3 per person. Growth rate of human capital .7 percent. Hence Human Capital stock growth rate overall all economic growth is .7*.26=.182. We have so much education that it is very hard to get more. Very hard to keep adding to that stock. Some time you need to work.
Output growth rate is 1.9 per person.

2). Externality from physical capital
If this is true, govt should drive more capital investment.

Gy = a^x * Gk


Gy = akGk + ahGh + Ga

a*k >> ak