Has Neo-classical Revolution Gone Too Far?

Please read Klenow and Rodriguez-Clare’s paper (KRC) Has Neo-classical Revolution Gone Too Far?

1. Write down and explain the human capital production function proposed by KRC.

2. Why is this an improvement relative to Mankiw, Romer and Weilâ’s work?

Part II

The following questions are based on the paper by Hansen and Prescott, Malthus to Solow, American Economic Review, 2002.

1.Write down the key features of the model:

Describe firms: their technologies, factors of production and objectives;
Describe households: their demographic structure and preferences;
Write down the household optimization problem; list the markets and their clearing conditions.

2. Describe the intuition behind the transition from a malthusian economy to growth.