If the marginal product of capital net of depreciation equals 8 percent, the rate of growth...
If the marginal product of capital net of depreciation equals 8 percent, the rate of growth of population equals 2 percent, and the rate of labour-augmenting technological progress equals 2 percent, what must happen to the saving rate to reach the Golden Rule level of the capital stock?
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If the marginal product of capital net of depreciation equals 8
percent, the rate of growth...
Consider an economy in a steady state with population growth rate η, a rate of capital depreciati...
Consider an economy in a steady state with population growth rate η, a rate of capital depreciation δ , and a rate of technological progress g. a) At the steady state Δk = 0, where k equals capital per effective worker. What condition must be met for this to hold? Describe the condition in words as well as mathematical expressions. b) Describe in words what is maximized at the Golden Rule level of k. c) What mathematical condition must be...
In the nation of Wiknam, the capital share of GDP is 40 percent, the average growth...
In the nation of Wiknam, the capital share of GDP is 40 percent,
the average growth in output is 4 percent per year, the
depreciation rate is 6 percent per year, and the capital–output
ratio is 5. Suppose that the production function is Cobb–Douglas
and that Wiknam has been in a steady state. (For a discussion of
the Cobb–Douglas production function, see Chapter 3.)
c. Suppose that public policy alters the saving rate so
that the economy reaches the Golden...
3. LaunchPad. In the United States, the capital share of GDP is about 30 percent, the...
3. LaunchPad. In the United States, the capital share of GDP is about 30 percent, the average growth in output is about 3 percent per year, the depreciation rate is about 4 percent per year, and the capital-output ratio is about 2.5. Suppose that the production function is Cobb-Douglas and that the United States has been in a steady state. (For a discussion of the Cobb-Douglas production function, see Chapter 3.) a. What must the saving rate be in the...
An economy with a population growth rate at 2 percent and a rate of technological growrh...
An economy with a population growth rate at 2 percent and a rate of technological growrh at 3 percent is in steady state. If the capital-output ratio is 2, depreciation amounts to 10 percent of GDP, and capital income is 20 percent of GDP, then this economy would need to ......... the Golden Rule steady state. (Please, is it to decrease or increase saving rate, s, or do nothing. OR do I decrease the steady state stock of capital per...
In the Solow growth model without population growth, if an economy has a steady-state value of...
In the Solow growth model without population growth, if an economy has a steady-state value of the marginal product of capital (MPK) of 0.125, a depreciation rate of 0.1, and a saving rate of 0.225, then the steady-state capital stock per worker: Select one: a. is less than the Golden Rule level. O b. is greater than the Golden Rule level. c. could be either above or below the Golden Rule level. d. equals the Golden Rule level.
Economic Growth II — Work It Out Question 2 In the nation of Wooknam, the capital...
Economic Growth II — Work It Out Question 2 In the nation of Wooknam, the capital share of GDP is 35 percent, the average growth in output is 3.0 percent per year, the depreciation rate is 5.0 percent per year, and the capital-output ratio is 4.5. Suppose that the production function is Cobb- Douglas and that Wooknam has been in a steady state. Round answers to two places after the decimal when necessary. a. In the initial steady state, what...
Economic Growth II — Work It Out Question 2 In the nation of Wooknam, the capital...
Economic Growth II — Work It Out Question 2 In the nation of Wooknam, the capital share of GDP is 40 percent, the average growth in output is 3.0 percent per year, the depreciation rate is 6.5 percent per year, and the capital output ratio is 4.5. Suppose that the production function is Cobb! Douglas and that Wooknam has been in a steady state. Round answers to two places after the decimal when necessary. c. Suppose that public policy alters...
4. Suppose an economy has capital share of half, a savings rate of 12%, depreciation rate...
4. Suppose an economy has capital share of half, a savings rate of 12%, depreciation rate of 2%, population growing at 2% and labor-augmenting technological change of 2% yearly. a) What is the steady-state level of capital per efficiency unit of labor? b) Is this economy at the golden rule level of savings/investment? Fully detail your reasoning. c) If the economy decides to transition to Golden Rule, what will happen to consumption, capital per efficiency unit of labor and output...
Steady state question
The capital share of GDP is about 40 percent, the average growth in output is about2 percent per year, the depreciation rate is about 3 percent per year, and the capital–output ratiois about 1.5. Suppose that the production function is Cobb–Douglas andin a steady state.a. What must the saving rate be in the initial steady state? [Hint: Use the steady-staterelationship, sy = (δ + n + g)k.]b. What is the marginal product of capital in the initial steady state?c. Suppose...
2. Suppose that the US is initially at the golden-rule level of steady-state capital accumulation given...
2. Suppose that the US is initially at the golden-rule level of steady-state capital accumulation given the current rates of depreciation, technological progress, and population growth a. What does “the golden-rule level of steady-state capital accumulation” mean? b. When there are positive rates of depreciation, technological progress, and population growth, explain how each of the following variables is changing over time when the economy is at the golden-rule level of capital: i. Labor ii. Labor efficiency units iii. Total capital...
In the nation of Wiknam, the capital share of GDP is 40 percent,
the average growth in output is 4 percent per year, the
depreciation rate is 6 percent per year, and the capital–output
ratio is 5. Suppose that the production function is Cobb–Douglas
and that Wiknam has been in a steady state. (For a discussion of
the Cobb–Douglas production function, see Chapter 3.)
c. Suppose that public policy alters the saving rate so
that the economy reaches the Golden...
3. LaunchPad. In the United States, the capital share of GDP is about 30 percent, the average growth in output is about 3 percent per year, the depreciation rate is about 4 percent per year, and the capital-output ratio is about 2.5. Suppose that the production function is Cobb-Douglas and that the United States has been in a steady state. (For a discussion of the Cobb-Douglas production function, see Chapter 3.) a. What must the saving rate be in the...
In the Solow growth model without population growth, if an economy has a steady-state value of the marginal product of capital (MPK) of 0.125, a depreciation rate of 0.1, and a saving rate of 0.225, then the steady-state capital stock per worker: Select one: a. is less than the Golden Rule level. O b. is greater than the Golden Rule level. c. could be either above or below the Golden Rule level. d. equals the Golden Rule level.
Economic Growth II — Work It Out Question 2 In the nation of Wooknam, the capital share of GDP is 35 percent, the average growth in output is 3.0 percent per year, the depreciation rate is 5.0 percent per year, and the capital-output ratio is 4.5. Suppose that the production function is Cobb- Douglas and that Wooknam has been in a steady state. Round answers to two places after the decimal when necessary. a. In the initial steady state, what...
Economic Growth II — Work It Out Question 2 In the nation of Wooknam, the capital share of GDP is 40 percent, the average growth in output is 3.0 percent per year, the depreciation rate is 6.5 percent per year, and the capital output ratio is 4.5. Suppose that the production function is Cobb! Douglas and that Wooknam has been in a steady state. Round answers to two places after the decimal when necessary. c. Suppose that public policy alters...
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