Consider adding capital back in the Romer model, where the saving rate is constant and population...
1. Let's review the setup of the Solow growth model with saving rate s, constant population growth rate n, and constant technology growth rate g Kt+1(1-8)K Lt+ 1 = (1 + n) Et+1-(1+g)E a) b) c) What is the steady-state capital and output per effective worker? (5pts) Solve for the golden rule level of capital. What is the saving rate then? (5pts) Many health experts have argued that malnutrition leads to reduced work capacity. Suppose in the Solow model, this...
1. Let's review the setup of the Solow growth model with saving rate s, constant population growth rate n, and constant technology growth rate g Kt+1(1-8)K Lt+ 1 = (1 + n) Et+1-(1+g)E a) b) c) What is the steady-state capital and output per effective worker? (5pts) Solve for the golden rule level of capital. What is the saving rate then? (5pts) Many health experts have argued that malnutrition leads to reduced work capacity. Suppose in the Solow model, this...
The Romer model consists of the following equations: Output production function: Y4 = A Lyt Idea production function: AA +1 = 2A Lat Resource constraint: Ly + Lat = L Allocation of labor: Lat = IL Suppose the parameters of the Romer model take the following values: Ao = 100, 1 = 0.06, 3 = 1/3000, L = 1000 18. What is the growth rate of output per person in this economy? a) 1% b) 2% c) 4% d) 10%...
Q1)Consider a version of the Solow model where population grows at rate n. Assume that technology is Cobb-Douglas so that output is given by Yt = KtαLt(1−α).Capital depreciates at rate δ and a fraction s of income is invested in physical capital every period.A. Write down an expression describing capital accumulation in this economy and solve for the steady-state levels of capital and output per worker. Illustrate your answer in a diagram.B. How is steady-state capital per worker affected by...
explain why this has not happenear 9. A variation on the Romer model: Consider the following variation: Y, = A}"?L) A4+1 = ZAL. L.: + Lee = , Lar = EL. There is only a single difference: we've changed the exponent on 4, in the production of the output good so that there is now a diminishing marginal product to ideas in that sector. (a) Provide an economic interpretation for each equation. (b) What is the growth rate of knowledge...
Consider the Solow growth model. Output at time t is given by the production function Yt = AK 1 3 t L 2 3 where Kt is total capital at time t, L is the labour force and A is total factor productivity. The labour force and total factor productivity are constant over time and capital evolves according the transition equation Kt+1 = (1 − d) ∗ Kt + It , where d is the depreciation rate. Every person saves...
Question 5. (4 points each) Consider the Solow model in Chapter 6. Production function is given by Y = A_KENZ The notations of variables are the same as the slides for Ch.6.The depreciation rate d is 0.1, the population growth rate n is 0.1, and the saving rate s is 0.2. The level of productivity is constant, so At = 2 all the time. (1) Compute the steady-state level of capital per person k*. (2) Compute the steady-state level of...
Solow-Romer Model 2. Let the production function for output be 11/2 YA,K/2L2 Compared to the model described in the Chapter 6 Appendix, the exponent on capital has been increased from 1/3 to 1/2 above and decreased on labor from 2/3 to 1/2 to preserve constant returns to scale in objects. All of the other assumptions from lecture and/or from the Chapter 6 Appendix are the same What is the growth rate of output per worker along a balanced growth path?...
Consider the Solow growth model with depreciation rate and population growth rate n. The equation of motion for the capital stock and the per worker production function in this economy are given by: Ak= s(f(k) - (8 + n) k y= f(k) = k1/4 a). Suppose adoption of modern birth control methods in a developing country causes the population growth rate to decrease. What happens in the main Solow diagram: what curve(s) shin, what happens to the steady- state level...
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Question 5. (4 points each) Consider the Solow model in Chapter 6. Production function is given by Yt = A+KENZ The notations of variables are the same as the slides for Ch.6.The depreciation rate d is 0.1, the population growth rate n is 0.1, and the saving rate s is 0.2. The level of productivity is constant, so At = 2 all the time. (7) Is the policy to change saving rate from 0.2 to the one...