Masters: Effect of automation on business and economy
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Neoclassical growth model
The neoclassical growth model , also known as the Solow–Swan growth model or exogenous growth model , is a class of economic models of long-run economic growth set within the framework of neoclassical economics . Neoclassical growth models attempt to explain long run economic growth by looking at productivity , capital accumulation , population growth , and technological progress . [ edit ] Development of the model The neo-classical model was an extension to the 1946 Harrod–Domar model that included a new term: productivity growth. Important contributions to the model came from the work done by Robert Solow and T.W. Swan who independently developed relatively simple growth models. [ 1 ] [ 2 ] Solow's model fitted available data on US economic growth with some success. [ 3 ] In 1987, Solow received the Nobel Prize in Economics for his work.
Ramsey–Cass–Koopmans model
The Ramsey–Cass–Koopmans model or the Ramsey growth model is a neo-classical model of economic growth based primarily on the work of the economist and mathematician Frank P. Ramsey , with significant extensions by David Cass and Tjalling Koopmans . The Ramsey model differs from the Solow model in that it explicitly models the choice of consumption at a point in time and so endogenizes the savings rate . As a result, unlike in the Solow model , the saving rate may not be constant along the transition to the long run steady state . Another implication of the model is that the outcome is Pareto optimal or Pareto efficient .
Labour-augmenting technical progress « mnmeconomics
The basic form of the Solow model gives us a bit of an unsatisfactory conclusion: 1. The economy will grow in terms of output per worker until it reaches a steady state level of output per worker. At steady state level of output per worker, the economy still grows, but it only grows at the rate of labour force growth (which we model as equal to the rate of population growth).Solow Model « mnmeconomics
The basic form of the Solow model gives us a bit of an unsatisfactory conclusion: 1. The economy will grow in terms of output per worker until it reaches a steady state level of output per worker. At steady state level of output per worker, the economy still grows, but it only grows at the rate of labour force growth (which we model as equal to the rate of population growth). 2.
The algebra of the Solow model « mnmeconomics
When I looked at the Harrod-Domar model on this blog I basically presented two forms, a basic version : and a version in per capita terms : Because the Solow model is based around the concept of two factors of production (capital and labour), the presence of labour is central to the model because this is why you get diminishing returns to capital as you add more capital , so it makes sense to think about the Solow as a sort of ‘per capita’ model, by thinking in terms of output and capital per worker .
In economics , diminishing returns (also called diminishing marginal returns ) is the decrease in the marginal (per-unit) output of a production process as the amount of a single factor of production is increased, while the amounts of all other factors of production stay constant.
Diminishing returns
The productivity paradox was analyzed and popularized in a widely-cited article [ 1 ] by Erik Brynjolfsson , which noted the apparent contradiction between the remarkable advances in computer power and the relatively slow growth of productivity at the level of the whole economy, individual firms and many specific applications. The concept is sometimes referred to as the Solow computer paradox in reference to Robert Solow 's 1987 quip, "You can see the computer age everywhere but in the productivity statistics." [ 2 ] The paradox has been defined as the “discrepancy between measures of investment in information technology and measures of output at the national level.” [ 3 ] It was widely believed that office automation was boosting labor productivity (or total factor productivity ). However, the growth accounts didn't seem to confirm the idea. From the early 1970s to the early 1990s there was a massive slow-down in growth as the machines were becoming ubiquitous.
Productivity paradox
Moore's law
An Osborne Executive portable computer, from 1982 with a Zilog Z80 4MHz CPU, and a 2007 Apple iPhone with a 412MHz ARM11 CPU. The Executive weighs 100 times as much, is nearly 500 times as large by volume, costs approximately 10 times as much (adjusting for inflation), and has 1/100th the clock frequency of the phone. Moore's law is the observation that over the history of computing hardware , the number of transistors on integrated circuits doubles approximately every two years.
Economics of Information: Is Koomey's Law eclipsing Moore's law?
Most people are familiar with Moore's Law, the doubling of computer power roughly every 18 months. But as technology becomes more mobile "Koomey's Law" may be more relevant to consumers.
Rock's law or Moore's second law , named for Arthur Rock , says that the cost of a semiconductor chip fabrication plant doubles every four years. As of 2003, the price had already reached about 3 billion US dollars.
Rock's law
Wirth's law is a computing adage made popular by Niklaus Wirth in 1995. [ 1 ] [ 2 ] It states that "software is getting slower more rapidly than hardware becomes faster."
Wirth's law
Moore's Law will continue for at least another 10 years, according to Intel cofounder Gordon Moore, but it's going to take a lot of work. "Another decade is probably straightforward," Moore said, speaking at the International Solid-States Circuits Conference. "There is certainly no end to creativity."