6. (Romer 2006, page 93 Q 2.6) Productivity slowdown. Consider a Ramsey-Cass-Koopmans economy that is on...

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6. (Romer 2006, page 93 Q 2.6) Productivity slowdown. Consider a Ramsey-Cass-Koopmans economy that is on its balanced growth path (i.e. steady state) and suppose that there is a permanent fall in g (technological progress rate). a. How, if at all, does this affect the k=0 curve?

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Answer 1

Answer #1

Ramsay function states that K will br higher if capital is less productive and lower if consumers are impatient .

As per Ramsay function in steady state growth the fall in Technological progress results in lower value of K.

The situation can be plotted on graph

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Answer 2

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6. (Romer 2006, page 93 Q 2.6) Productivity slowdown. Consider a Ramsey-Cass-Koopmans economy that is on...

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