Errata1
Chapter 4
p.122 Line 4. Replace ‘M’ at the end of the line with ‘H’.
Chapter 7
p.234 In the second and third lines of equation 7.12, there should be no ‘prime’
symbol following the f.
Chapter 10
p.362 Lines three and two from the bottom of the page: replace AD with AD0 and
AD' with AD1
p.382 In line 10, replace the reference to Fig. 10.3 by Fig 10.2. In line 17, replace Z
by B. In line 18, replace Fig. 10.3 by Fig. 10.2.
Chapter 11
p.389 In Fig. 11.7, there should be labels E0, E1, E2 where the dashed vertical lines
cut the axis in the top panel.
PTO
1
With thanks to the readers who have pointed out these mistakes, in particular to Luis Arjona for his
corrections to Chapters 13 and 14.
Chapter 13
p. 472 Delete ‘unique’ before ‘steady-state’ equilibrium.
p.486 Fig. 13.9 The label for the double-headed arrow should be k hat with a dot on
top. The dot is not visible in the figure.
^
^
p.488 In Fig. 13.10, the label on the downward sloping line should be sf (k ) / k . The
bottom right hand side diagram is incorrect and should be replaced as shown below.
The growth rate of GDP per capita is rising on the convergence path as shown in the
(correct) bottom left hand diagram (and also in Fig. 13.11): x goes up immediately at
t0 and the growth rate of the capital stock gradually converges to the new steady state
rate, x’. Hence in the bottom right diagram in Fig. 13.10, convergence to the new
trend growth path is from above as shown.
(  x ' n)kˆ
ŷ

Growth
rates
sf kˆ

sf kˆ
kˆ
(  x ' n)
(  x  n)kˆ
g kˆ  0
(  x  n)
k̂ **
g Y
k̂ *
k̂ **
k̂
k̂ *
k̂
log Y L 
L
x'
x
t0
Time
t0
Time
Figure 13.10 Policy experiment 3: an exogenous increase in the rate of
technological progress
p. 496 In Fig. 13.17, the first kˆB* from the left should not have a *, i.e. it should be kˆB .
&
p. 510 In the Solow equation (13.36), the dot on kˆt is missing, it should be kˆt .
p. 511 In the left hand side of equation (13.37), there should be no dot on the k̂ term
and it should have an asterisk, i.e. it should be k̂ * .
p.517 In line 11, it should say constant returns to scale and in line 18, it should say
increasing returns to scale. In each case, the ‘s’ in returns is missing.
Chapter 14
p. 530 The diagram, Fig. 14.1 is incorrect (the same mistake as in Fig. 13.10 was
repeated here). The correct diagram is shown below.
log Y L 
F
H
E
G
C
B
A
t0
Time
Figure 14.1 Growth paths with exogenous and endogenous growth
p. 532 Fig. 14.2 The circle above K should be a solid dot.
p. 537 In equation (14.8), s is missing before the Λ.
p. 541 In the line below equation (14.13), it should read g y  g k  g A , since the
growth rates are in per capita terms. Similarly, in equation (14.15), the left hand side
should be g y rather than gY since it refers to the growth rate of output per worker.
p. 543 Before the final sentence of the first paragraph, insert the following sentence:
The arrows in Fig. 14.4 highlight the direction of causality in the Solow-Swan (black
arrows) and Schumpeter (grey arrows) relationships.
p. 552 Insert in line 6 after x   : (where σ is the extent to which an innovation
raises productivity as explained on p. 542) so that …
Chapter 15
p. 624 Question A. There is an a missing before c0 and c1 in the equation. The
equation should read:
b

1 
b 2  2
U  ac0  c02  e02 
 ac1  c1  e1 
2
2
1  
2
2 
p. 625 In Question B (iii) line 2, there should be a space between ‘a’ and ‘monopoly’.
p.627 In the equation beneath Figure 15.19, λ is in the wrong place. The line should
be:
 wi
 1
, which implies wi  w 
pi  1 
.
 1 

Chapter 17
p. 717 Fig. 17.13. There is a line missing from this chart. The complete figure is
shown below.
8.0
6.0
4.0
2.0
**
0.0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
-2.0
-4.0
-6.0
-8.0
General government financial balance % GDP
Constructed private sector balance
** One-off revenue from sale of mobile telephone licenses
Source: OECD
Current account balance (%GDP)