Category Productivity
Lump of Labour, Say’s Law, and the slope of the AD curve
I wrote this partly for Sandwichman, and mostly I wrote it because this same question crops up time and time again. It's a very old question, but it always looks like a new question if the technology is new enough. People in caves were probably arguing about whether 3-D printing robots flints would cause mass […]
“Human Capital” and “Land Capital”
Branko Milanovic (HT Mark Thoma) misses the point about the usefulness of the concept "human capital". To explain the point, let me talk about "land capital" instead. Raw land, in it's natural state, often isn't very productive. Before you can grow wheat on it, you usually need to clear it, or drain it, or fertilise […]
Why do I hate driverless cars?
I hate driverless cars. That is the fact that needs to be explained. Not justified, but explained. Driverless cars pose no threat to my job, my income, or my wealth. That's not it. The insurance companies, or safety-nazis, might force us to use driverless cars. That would be a threat to my enjoyment of driving. […]
A Lower Dollar Won’t Reverse Manufacturing’s Decline
The decline in the value of the Canadian dollar relative to the US dollar is expected to provide a boost to the manufacturing sector. There is certainly no shortage of commentary on whether the fall in the dollar is the result of economic fundamentals or an engineered conspiracy designed to boost Conservative re-election prospects in […]
Does the End of Growth Mean the Rise of Inequality?
Classical economics argued that eventually a stationary state or the end of economic growth was going to be reached but they did not forsee the technological change of 19th century industrialization. The result was income and wealth growing by leaps and bounds. However, yet another paper – this time by Thomas Piketty and Gabriel Zucman […]
Rates, rents, shares, and capital theory
I think this is the technology that Paul Krugman has in mind: 1. C + Kdot = A.La.K(1-a) C is consumption, K is the capital stock, Kdot is investment, L is employment, A is a parameter that represents productivity, a is a parameter that (in competitive profit-maximising equilibrium) will equal labour's share of national income, […]
Do New Keynesians need to assume (much) labour hoarding?
We know that measured productivity falls in a recession (relative to trend). Real Business Cycle theorists say that this is because a negative productivity shock is what caused the recession. Keynesians say that a negative aggregate demand shock is what caused the recession, and labour hoarding (firms don't like to lay off workers even if […]
Macroeconomics when all goods are non-rival
Sometimes it's good to build really weird models. Because bits of the real world are a bit weird, even if the whole world isn't as totally weird as the model, and taking an extreme case can help us understand the effect of those weird bits. Plus it's fun. I'm going to assume that all produced […]
Testing productivity shocks vs labour hoarding in a traditional industry?
This is just an idea that's been floating uselessly in my mind for some time. I have never been able to apply it. But maybe someone out there could. This isn't an earth-shattering post. Maybe someone else has already thought of the same idea. Or even applied it, and I just haven't heard about it. […]
Is Economic Growth Really Ending?
Robert Gordon has argued in his recent NBER paper “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds” that growth rates have slowed and we are reverting to very low historical growth rates and indeed a period of economic stagnation. However, what I find intriguing is that an examination of some long-term data […]
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