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There are different notions of neutrality of technical progress in macroeocnomics. You can have Hicks-neutral technical progress - that is a technical progress that increases the marginal productivity of all factors of production by the same proportion at the same capital-labor ratio. An example of Hicks-neutral production function would be one where $Y^*= ...


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tl;dr: R&D spending cannot stimulate economy during just by increasing long-run aggregate supply because recessions are fluctuations around the long-run aggregate supply and not necessary affected by the long-run aggregate supply. A in which spending on R&D in principle could be more effective in fighting recessions than other spending. The ...


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I found this excellent Economic Letter from the Federal Reserve Bank of San Francisco that speaks to this observation. It is from Carl R. Walsh (july 16,2004) (https://www.frbsf.org/economic-research/publications/economic-letter/2004/july/the-productivity-and-jobs-connection-the-long-and-the-short-run-of-it/ ) In this letter he notes that, newspaper ...


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Capital accumulation would still appear as investment GDP. Its possible theres other applications for this spending that would result in higher gdp. For example, GDP spiked in ww2 because military spending happens to be very efficient at inflating GDP. So it is intuitively plausible that potential output is hidden by rising investment- the closest equivalent ...


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The logic you presented is known as technological unemployment. It is true that due to technological improvements, you would need less people to do the same amount of work. But along with technological progress, you would need more highly skilled workers to operate these high-tech machinery. What Mankiw meant (at least according to me) is that the demand ...


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