Question

Discuss the validity of each statement.

a) In a Malthusian world, population control is one way to achieve sustained, long-run economic growth.

b) The endogenous growth model better explains the economic growth facts than the Solow model.

Answer 1

(A)Fluctuations in population size and real wages over this epoch also reáected the Malthusian pattern. Episodes of technological progress, land expansion, favorable climatic conditions, or major epidemics (resulting in a decline of the adult population), brought about a temporary increase in real wages and income per capita. As the catastrophic decline in the population of England during the Black Death (1348-1349 CE), from about 6 million to about 3.5 million people, signiÖcantly increased the land-labor ratio, tripling real wages over the subsequent 150 years. Ultimately, however, the majority of this increase in real resources per capita was channeled towards higher fertility rates, increasing the size of the population and bringing the real wage rate in the 1560s back to the proximity of its pre-plague level.

Population Density
Variations in population density across countries during the Malthusian epoch reáected primarily cross-country di§erences in technologies and land productivity. Due to the positive adjustment of the population to an increase in income per capita, di§erences in technologies or in land productivity across countries resulted in variations in population density rather than in the standard of living.11 For instance, Chinaís technological advancement in the period 1500-1820 CE permitted its share of world population to increase from 23.5% to 36.6%, while its income per capita at the beginning and end of this time interval rema

(b)

What is Endogenous Growth Theory?

Endogenous growth theory is an economic theory which argues that economic growth is generated from within a system as a direct result of internal processes. More specifically, the theory notes that the enhancement of a nation's human capital will lead to economic growth by means of the development of new forms of technology and efficient and effective means of production.

KEY TAKEAWAYS

• Endogenous growth theory maintains that economic growth is primarily the result of internal forces, rather than external ones.
• It argues that improvements in productivity can be tied directly to faster innovation and more investments in human capital from governments and private sector institutions.
• This view contrasts with neoclassical economics.