Adam Smith Business School

Professor Chad Jones, Stanford University

Recipes and Economic Growth: A Combinatorial March Down an Exponential Tail
Thursday 13 January, 4pm - 5.30pm
Zoom online seminar

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Abstract

New ideas are often combinations of existing goods or ideas, a point emphasized by Romer (1993) and Weitzman (1998). A separate literature highlights the links between exponential growth and Pareto distributions: Gabaix (1999) shows how exponential growth generates Pareto distributions, while Kortum (1997) shows how Pareto distributions generate exponential growth. But this raises a "chicken and egg" problem: which came first, the exponential growth or the Pareto distribution? And regardless, what happened to the Romer and Weitzman insight that combinatorics should be important? This paper answers these questions by demonstrating that combinatorial growth in the number of draws from standard thin-tailed distributions leads to exponential economic growth; no Pareto assumption is required. More generally, it provides a theorem linking the behavior of the max extreme value to the number of draws and the shape of the tail for any continuous probability distribution.

Biography

Charles I. (Chad) Jones is the STANCO 25 Professor of Economics at the Graduate School of Business at Stanford University and a Research Associate of the National Bureau of Economic Research. He is a member of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a co-editor of Econometrica, and the author of two undergraduate textbooks. Professor Jones is 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 standards of living across countries. In recent years, he has used his expertise in macroeconomic methods to study how race and gender contribute to economic growth, changes in top income inequality, and the economics of data. He received his Ph.D. from M.I.T. in 1993.

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Further information: business-events@glasgow.ac.uk 

First published: 7 December 2021