Macroeconomic Theory II

1
Macroeconomic Theory II

• Winter 2008
• Louis Hotte
• University of Ottawa

2
First part

• Long Run Macroeconomics

3
Introduction

• A world of contrast

4
Over types of challenges

• Developing countries (DC)
• 826 millions undernourished
• 1 billion without access to safe drinking water
• 2,4 billion without sanitation
• Industrialized countries (IC)
• Obesity

5
Of life and death

• Life expectancy according to UN definition of
  Human Development (HD)
• 1.1 billion with high HD 77 years
• 4.05 billion with middle HD 67 years
• 840 million with low HD 53 years

6
Of command over resources

• Cars/1000 individuals
• Rich countries 443
• Poor countries 9
• Phone lines/1000 individuals
• Canada 677
• Bangladesh 4
• Africa
• World population 13
• Electric power consumption 2.9
• USA
• World population 5
• Electric power consumption 25

7
Of inequality

• 20 richest receive 62 of world income
• 1.2 billion individuals live on less than 1/day.
• Between 2.5 and 3 billion on less than 2/day.

8
Why?

• Does it have to be like that?
• Can we understand what causes such contrasts?
• If so, can we do something about it?
• Or does the wealth of some rely on the poverty of
  others?

9
The study of long run macroeconomicsObjectives
for this course (1)

• Answer (partially) the questions on previous
  slides, given current state of knowledge.
• (Begin to) understand why some countries are rich
  while others are poor.
• (Begin to) understand why some countries grow
  fast and others not.

10
The study of long run macroeconomicsObjectives
for this course (2)

• Acquire a sense of how those questions can be
  analyzed with rigor and science, i.e. with
• Sound and enlightening theory
• Rich data and observations from across the world
  and historical
• Quantitative perspective (direction and magnitude
  of effects)
• Attempt to include latest advancements in
  knowledge