Seminar in Economics | Recipes and Economic Growth: A Combinatorial March Down an Exponential Tail with Chad Jones

Department of Economics welcomes you to a seminar with Chad Jones, Stanford University, who will present "Recipes and Economic Growth: A Combinatorial March Down an Exponential Tail".

Start time: 2022-09-21 at 15:30

End time: 2022-09-21 at 16:45

Location: Sveavägen 65, room 750

Welcome to this Higher Seminar in Economics organized by the Department of Economics, SSE. The seminar speaker is Chad Jones, Stanford University, presenting "Recipes and Economic Growth: A Combinatorial March Down an Exponential Tail".

Abstract

New ideas are often combinations of existing ideas, a point emphasized by Romer (1993) and Weitzman (1998). But this insight is largely absent from state-of-the-art models. Separately, Kortum (1997) created a new framework for modeling growth, one where ideas are draws from a probability distribution, and argued that the Pareto distribution plays an essential role. What happened to the Romer-Weitzman observation that combinations matter, and do we really need to make such a strong distributional assumption to get growth? This paper shows that combinatorial increases in the number of draws from standard thin-tailed distributions leads to exponential economic growth. More broadly, the paper provides a theorem linking the behavior of the max extreme value to the number of draws and the shape of the upper tail for probability distributions.

Charles I. (Chad) Jones is an economist noted for his research on long-run economic growth. In particular, he has examined theoretically and empirically the fundamental sources of growth in incomes over time and the reasons underlying the enormous differences in living standards across countries.