An economy (country A) has a Cobb-Douglas production function: Y = K0.4 (LE) 0.6 The economy...
An economy (country A) has a Cobb-Douglas production function: Y = K0.4 (LE) 0.6 The economy has a saving rate of 48 percent, a depreciation rate of 2 percent, a rate of population growth of 1 percent, and a rate of labor-augmenting technological change of 3 percent.
Assume there is a second economy (country B) with everything identical to country A except for the rate of population growth, which is 2 percent.
Assume there is a third economy (country C) with everything identical to country B except for the rate of technological growth, which equals 1 percent.
Assume all countries start a k = 0, which country • (2 points) grows more in the long run (once steady state is reached), as given by the rate of growth of output per worker? • (2 points) will have higher output per worker in the long run?
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An economy (country A) has a Cobb-Douglas production function: Y
= K0.4 (LE) 0.6 The economy...
An economy (country A) has a Cobb-Douglas production function: Y = K0.4 (LE) 0.6 The economy...
An economy (country A) has a Cobb-Douglas production function: Y = K0.4 (LE) 0.6 The economy has a saving rate of 48 percent, a depreciation rate of 2 percent, a rate of population growth of 1 percent, and a rate of labor-augmenting technological change of 3 percent. Assume there is a second economy (country B) with everything identical to country A except for the rate of population growth, which is 2 percent. Answer questions 4 and 5 above for country...
An economy has a Cobb-Douglas production function: Y = K"(LE)!-a The economy has a capital share...
An economy has a Cobb-Douglas production function: Y = K"(LE)!-a The economy has a capital share of 0.25, a saving rate of 40 percent, a depreciation rate of 3.00 percent, a rate of population growth of 0.75 percent, and a rate of labor- augmenting technological change of 2.0 percent. It is in steady state. b. Solve for capital per effective worker (k*), output per effective worker (y*), and the marginal product of capital.
An economy has a Cobb-Douglas production function: Y = K°(LE)1-a The economy has a capital share...
An economy has a Cobb-Douglas production function: Y = K°(LE)1-a The economy has a capital share of 0.25, a saving rate of 43 percent, a depreciation rate of 3.00 percent, a rate of population growth of 4.25 percent, and a rate of labor-augmenting technological change of 3.5 percent. It is in steady state. b. Solve for capital per effective worker (k*), output per effective worker (y*), and the marginal product of capital. k* = 2.83 y* * = 1.30 =...
Economic Growth II — Work It Out Question 1 An economy has a Cobb-Douglas production function:...
Economic Growth II — Work It Out Question 1 An economy has a Cobb-Douglas production function: Y = K (LE)-a The economy has a capital share of 0.25, a saving rate of 47 percent, a depreciation rate of 4.00 percent, a rate of population growth of 2.25 percent, and a rate of labor-augmenting technological change of 2.5 percent. It is in steady state. a. At what rates do total output and output per worker grow? Total output growth rate: %...
An economy has a Cobb-Douglas production function: Y = Ka(LE)(1-a). The economy has a capital share...
An economy has a Cobb-Douglas production function: Y = Ka(LE)(1-a). The economy has a capital share of a third (means a= 1/3), a saving rate of 24 percent, a depreciation rate of 3 percent, and a rate of labor-augmenting technological change of 1 percent. It is in steady state. a. At what rate does total output, output per worker, and output per effective worker grow? b. Solve for steady state capital per effective worker, output per effective worker, consumption per...
Economic Growth II - Work It Out Question 1 An economy has a Cobb Douglas production...
Economic Growth II - Work It Out Question 1 An economy has a Cobb Douglas production function: Y = K (LE). The economy has a capital share of 0.20, a saving rate of 50 percent, a depreciation rate of 3.50 percent, a rate of population growth of 4.00 percent, and a rate of labor augmenting technological change of 2.5 percent. It is in steady state. a. At what rates do total output and output per worker grow? Total output growth...
Consider an economy having a Cobb Douglas production function, where the share of capital income in...
Consider an economy having a Cobb Douglas production function,
where the share of capital income in total income is 1/2. The
depreciation rate is , population growth rate is n = 0.02
A. The golden rule level of capital per worker is .
B. The golden rule level of investment per worker is .
C. The golden rule level of output per worker is .
D. The golden rule savings rate is X% where X equals .
QUESTION 2 20...
5. Calibrated Cobb-Douglas Growth Model Assume an economy has the following production function: Y = F(K,...
5. Calibrated Cobb-Douglas Growth Model Assume an economy has the following production function: Y = F(K, AL) = K 0.4 (AL)0.6. (a) Write down the production function per effective worker. (20 marks) (b) For this economy, the savings rate is 20%, the depreciation rate is 10% per year, the population growth rate is 2% per year, and the technology growth rate is 3% per year. Calculate the steady-state capital stock per effective worker, output per effective worker, and consumption per...
1) Consider an economy having a Cobb Douglas production function, where the share of capital income...
1) Consider an economy having a Cobb Douglas production
function, where the share of capital income in total income is 1/2.
The depreciation rate is
, population growth rate is n = 0.02
2) Assume a general savings rate
, depreciation rate
and a production per worker
, where 0< <1.
Suppose the savings rate increases. What happens to the golden rule
level of capital?
3) Consider an economy that is described by the production
function
. The depreciation rate...
Problem 2 Consider two economies: San Escobar and New Ireland. Both are described by a neoclassical...
Problem 2 Consider two economies: San Escobar and New Ireland. Both are described by a neoclassical Cobb-Douglas production function: Y = KOS(A N.)0,5. In San Escobar the saving rate is s=0,5; the rate of population growth n=0,01; the depreciation rate is d 0,01 and the rate of technological progress is g=0,03. In New Ireland, the saving rate is s=0,6; the rate of population growth n=0; the depreciation rate is d=0,01 and the rate of technological progress is g=0,02 a) In...
An economy has a Cobb-Douglas production function: Y = K"(LE)!-a The economy has a capital share of 0.25, a saving rate of 40 percent, a depreciation rate of 3.00 percent, a rate of population growth of 0.75 percent, and a rate of labor- augmenting technological change of 2.0 percent. It is in steady state. b. Solve for capital per effective worker (k*), output per effective worker (y*), and the marginal product of capital.
An economy has a Cobb-Douglas production function: Y = K°(LE)1-a The economy has a capital share of 0.25, a saving rate of 43 percent, a depreciation rate of 3.00 percent, a rate of population growth of 4.25 percent, and a rate of labor-augmenting technological change of 3.5 percent. It is in steady state. b. Solve for capital per effective worker (k*), output per effective worker (y*), and the marginal product of capital. k* = 2.83 y* * = 1.30 =...
Economic Growth II — Work It Out Question 1 An economy has a Cobb-Douglas production function: Y = K (LE)-a The economy has a capital share of 0.25, a saving rate of 47 percent, a depreciation rate of 4.00 percent, a rate of population growth of 2.25 percent, and a rate of labor-augmenting technological change of 2.5 percent. It is in steady state. a. At what rates do total output and output per worker grow? Total output growth rate: %...
Economic Growth II - Work It Out Question 1 An economy has a Cobb Douglas production function: Y = K (LE). The economy has a capital share of 0.20, a saving rate of 50 percent, a depreciation rate of 3.50 percent, a rate of population growth of 4.00 percent, and a rate of labor augmenting technological change of 2.5 percent. It is in steady state. a. At what rates do total output and output per worker grow? Total output growth...
Consider an economy having a Cobb Douglas production function,
where the share of capital income in total income is 1/2. The
depreciation rate is , population growth rate is n = 0.02
A. The golden rule level of capital per worker is .
B. The golden rule level of investment per worker is .
C. The golden rule level of output per worker is .
D. The golden rule savings rate is X% where X equals .
QUESTION 2 20...
5. Calibrated Cobb-Douglas Growth Model Assume an economy has the following production function: Y = F(K, AL) = K 0.4 (AL)0.6. (a) Write down the production function per effective worker. (20 marks) (b) For this economy, the savings rate is 20%, the depreciation rate is 10% per year, the population growth rate is 2% per year, and the technology growth rate is 3% per year. Calculate the steady-state capital stock per effective worker, output per effective worker, and consumption per...
1) Consider an economy having a Cobb Douglas production
function, where the share of capital income in total income is 1/2.
The depreciation rate is
, population growth rate is n = 0.02
2) Assume a general savings rate
, depreciation rate
and a production per worker
, where 0< <1.
Suppose the savings rate increases. What happens to the golden rule
level of capital?
3) Consider an economy that is described by the production
function
. The depreciation rate...
Problem 2 Consider two economies: San Escobar and New Ireland. Both are described by a neoclassical Cobb-Douglas production function: Y = KOS(A N.)0,5. In San Escobar the saving rate is s=0,5; the rate of population growth n=0,01; the depreciation rate is d 0,01 and the rate of technological progress is g=0,03. In New Ireland, the saving rate is s=0,6; the rate of population growth n=0; the depreciation rate is d=0,01 and the rate of technological progress is g=0,02 a) In...
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