What does "convergence of the rich economies" mean in the context of the Solow-Model. Please explain thoroughly.
The Solow-Model states that the convergence of marginal product of capital relative to labor is lower in the rich countries compared to poor countries, thus the rich will accumulate less capital and grow at a slower rate than the poor. Thus when the rich and poor countries approach with the same amount of capital the rich country's growth will be quite slowly (output and capital grow slower than n); while the poor country's growth will be relatively faster (output and capital grow faster than n).
What does "convergence of the rich economies" mean in the context of the Solow-Model. Please explain...
The Solow Growth Model is an “Exogenous Growth Model”. What does this mean? Is it a good or bad characteristic of the model, why?
Describe 1. Should poor countries grow faster than rich in a Solow model? Explain 2. Explain how changes in i. population growth rate, ii. saving rate, iii. technology growth rate change the stationary state in a Solow growth model.
This question is in context of the Solow Growth Model. Please walk through all equation steps. Thanks in advance! What does this equation tell us : y* = g/(1 - a) If techology grows at a rate of 1% per period- how fast does output per worker grow in the long run or steady state if the production function is Y = A*K5*LS
In the Solow Model, capital is subject to _____________________. So as you add additional units of capital to other fixed resources, there comes a point where more capital does not increase output as much as it did before. A) increasing returns B) the endowment effect C) diminishing returns 2) The Solow Model implies that countries with smaller initial capital stocks should grow rapidly. This implies that: A) poorer countries should eventually “catch-up” to richer countries (conditional convergence) B) poorer countries...
The banking industry has converged in the past 50 years. What does convergence mean in the context of the banking industry?
3. (Steady state in the Solow model) Consider two economies identical in everything except the production function. Economy 1 has a production function F(K, L)KoL1-a, economy 2 has a production function G(K, L)-aK(1-a)L. For both economies capital grows according to (1). a) Write output per worker as a function of capital per worker for both economies. b) Compute the steady state value of capital per worker for both these economies or, if it does not exist, show graphically that it...
Explain the graph in the Solow Model (exogenous growth model) that relates capital intensity and output per worker. What is the next period’s capital stock in the Solow Model? Explain it.
Consider two economies with fixed, differential TFP’s and are otherwise identical. (a) In Malthusian models, can fixed, differential TFPs explain the persistent gap in per capita income betwee rich and poor countries? Please explain. (b) In Solow models, can fixed, differential T F P s explain the persistent gap in per capita income betwee rich and poor countries? Please explain. (c) In Solow models, can fixed, differential TFPs explain the East Asian miracle [the fast growth of Japan, South Korea,...
What is the most important implication of the Solow growth model? Does it imply that an increase in the rate of private saving is useless as a means to increase the standard of living in the long run?
3. (Steady state in the Solow model) Consider two economies identical in everything except the production function. Economy 1 has a production function F(K, L) KL,economy 2 has a production function G(K, L) aK1 - a)L. For both economies capital grows according to (1). a) Write output per worker as a function of capital per worker for both economies. b) Compute the steady state value of capital per worker for both these economies or, if it does not exist, show...