A blanket of pollution that traps heat around the earth causes global warming, also known as climate change. This pollution comes from cars, factories, homes, and power plants that burn fossil fuels such as oil, coal, natural gas, and gasoline. Global warming pollution knows no boundaries. It enters the atmosphere, spreads across the globe, and traps heat around the earth for 50-200 years after it is emitted. That is why we need to reduce global warming pollution now, because our children, and their children, will still feel the effects of global warming for years to come. Currently, the levels of carbon dioxide in the atmosphere are at their highest levels in hundreds of thousands of years.

Require:

A. Explain the scope of environmental damage occur

B. Evaluate the effects of global warming.

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frace Out 20 OP pe ent of ent of eadily of the Sala- ferent is more optimism regarding convergence if we look at population-based measures than if we look only at country-based measures. EXERCISES 1. Where are these economies headed? Consider the following data: Âgo 1.000 0.972 0.517 0.468 0.234 ŷ97 United States 1.000 Canada Argentina Thailand Cameroon u n SK 0.204 11.9 0.010 0.246 11.4 0.012 0.864 0.453 0.144 8.5 0.014 0.233 0.213 6.1 0.015 0.048 0.102 3.4 0.028 58 3 EMPIRICAL APPLICATIONS OF NEOCLASSICAL GROWTH MODELS incomes. If we define per capita income relative to the United States to be - = y* YUS then from equation (3.8), relative incomes are given by a/(1-a) ĥÂ (3,8) where the "hat" () is used to denote a variable relative to its U.S. value, and x = n + g + 8. Notice, however, that unless countries are all grow- ing at the same rate, even relative incomes will not be constant. That is, if the United Kingdom and the United States are growing at different rates, then YUK/Yus will not be constant. In order for relative incomes to be constant in the steady state, we need to make the assumption that g is the same in all countries-that is the not 76 3 EMPIRICAL APPLICATIONS OF NEOCLASSICAL GROWTH MODELS .10 for all countries. Assume that + 8 = .075, a = 1/3 and g Using equation (3.9), estimate the steady-state incomes of these economies, relative to the United States. Consider two extreme cases: (a) the 1990 TFP ratios are maintained, and (b) the TFP levels converge completely. For each case, which economy will grow fast- est in the next decade and which slowest? Why? = frace Out 20 OP pe ent of ent of eadily of the Sala- ferent is more optimism regarding convergence if we look at population-based measures than if we look only at country-based measures. EXERCISES 1. Where are these economies headed? Consider the following data: Âgo 1.000 0.972 0.517 0.468 0.234 ŷ97 United States 1.000 Canada Argentina Thailand Cameroon u n SK 0.204 11.9 0.010 0.246 11.4 0.012 0.864 0.453 0.144 8.5 0.014 0.233 0.213 6.1 0.015 0.048 0.102 3.4 0.028 58 3 EMPIRICAL APPLICATIONS OF NEOCLASSICAL GROWTH MODELS incomes. If we define per capita income relative to the United States to be - = y* YUS then from equation (3.8), relative incomes are given by a/(1-a) ĥÂ (3,8) where the "hat" () is used to denote a variable relative to its U.S. value, and x = n + g + 8. Notice, however, that unless countries are all grow- ing at the same rate, even relative incomes will not be constant. That is, if the United Kingdom and the United States are growing at different rates, then YUK/Yus will not be constant. In order for relative incomes to be constant in the steady state, we need to make the assumption that g is the same in all countries-that is the not 76 3 EMPIRICAL APPLICATIONS OF NEOCLASSICAL GROWTH MODELS .10 for all countries. Assume that + 8 = .075, a = 1/3 and g Using equation (3.9), estimate the steady-state incomes of these economies, relative to the United States. Consider two extreme cases: (a) the 1990 TFP ratios are maintained, and (b) the TFP levels converge completely. For each case, which economy will grow fast- est in the next decade and which slowest? Why? =

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