Trade and the Diffusion of the Industrial Revolution
Robert E. Lucas, Jr., Professor of Economics at the University of Chicago will deliver the annual World Bank Development Economics Lecture on Thursday, November 15.
Robert E. Lucas will present his recent study on global economic growth and cross-country flows of production-related knowledge. He argues in his paper that these flows are the main force for reducing income inequality. Using evidence on successfully industrialized countries, he proposes a model to describe the evolution of real GDPs in the world economy that is intended to apply to all open economies. The five parameters of the model are calibrated using the Sachs-Warner definition of openness and time-series and cross-section data on incomes and other variables from the 19th and 20th centuries. The model predicts convergence of income levels and growth rates and has strong but reasonable implications for transition dynamics.
Robert Lucas, a leader of the new classical school of economic thought and of the rational expectations theory, in the 1970s inaugurated a new era of macroeconomics relying on the concept of supply-determined equilibrium, best exemplified in modern "Real Business Cycle" theory. He also made seminal contributions to the theory of investment, the theory of endogenous growth (with "human capital", 1988), the theory of asset pricing and the theory of money (with "cash-in-advance"). A professor at Chicago, Lucas won the Nobel Prize in 1995 for developing and applying the hypothesis of rational expectations. |
