EC4333 Lecture 6 Factor Market Integration & Growth

Growth and Capital Market Integration

Length 1.5 Hours

Aims

To show the effects of increased capital market integration

To show the verbal logic of growth

To develop the Solow Growth model.

Activity

Students will solve the Solow model with capital widening.

Introduction

Assuming an EMU, what are the economic effects of one? We saw last week that the EU was almost certainly not and OCA, yet the EU exists as a functioning currency area. What are the likely effects of this on growth amongst member states? We’ll develop the canonical model used to describe economic growth, and expose this model to the facts.

Further Reading

Wyplosz, C. ‘European Monetary Union: The Dark Sides of a Major Success’, Economic Policy, 2006 (in the coursepack, to download it from this link you must be on campus)

Slides

Watch the slides below.

Handout

Right click the image below and choose ’save target as’