• Doing the PPP adjustments

    • difficult to do because the “baskets” are not the same
    • price varies in different regions
    • measuring it also becomes political…

  • the macro or the micro?

    $$ y=Af(k,h) $$

    foreign aid in increasing $k$ (finance, direct aid, etc) or $h$ (schools)

    $k,h ,$ or $A$? World Bank in the 60s pursued $k$, then: more $h$…

    Mankiw, Romer, Weil(1992): explain 80% of different income per capita using $k$, $h$, and population growth.

    however, theories quickly get revised…

  • Growth regressions and its problems:

    • correlation v. causality
    • it is also hard to choose which regressions are right(”I just ran 4mil regressions”, Sala-I-Martin, 1997)

  • From macro to micro: while Solow’s theorem states that marginal return is equalized, such is not the case in the real world

  • Turns out $A$ is important…

    • history? Acemoglu, Johnson, Robinson(2001,2002)
    • geography? J. Sachs
    • however, growth varies thru time vs. fixed history and geography
    • macro policies?