1. Let's review the setup of the Solow growth model with saving rate s, constant 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...
The Solow model with technological progress.In the lecture, we talked about the Solow model with technological progress and populationgrowth. Now consider a simpler model with only technological progress. Denote thetechnology level at time \(\mathrm{t}\) by \(\mathrm{A}_{\mathrm{t}}\), and the growth rate of technology by \(\mathrm{g}_{\mathrm{A}}\). The number ofworker is constant, \(\mathrm{N}\). The production function is given by$$ Y_{t}=K_{t}^{\alpha}\left(A_{t} N\right)^{1-\alpha} $$where \(\alpha\) is a constant.(a) Define \(x_{t}=X_{t} / A_{t} N\), where \(X_{t}\) stands for all relevant aggregate variables in the model.Write down...
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...
3) Consider the Solow model with population growth and labor-augmenting technological progress. Suppose that the aggregate production function is Cobb- Douglas, i.e. Y = AK"(E · L)1-a, where A is a constant, while E denotes technological progress and grows at rate g. Labor grows at an exogenous rate n, and capital depreciates at rate d. As usual, people consume a fraction (1 – s) of their income. a. Use a graph similar to what we have seen in class to...
In a Solow-type economy with s, n and δ, total national saving, S t is S t = s Y t − h K t. The extra term, − h K t, reflects the idea that when wealth (as measured by the capital stock) is higher, saving is lower. (Wealthier people have less need to save for the future.) Find the steady-state values of per-worker capital, output, and consumption. What is the effect on the steady state of an increase...
Use the basic Solow growth model, without population growth or technological progress. (1) Draw a diagram with per worker output, y, consumption, c, saving, s and investment, i, on the vertical axis and capital per worker, k, on the horizontal condition. On this diagram, clearly indicate steady-state values for c, i, and y. Briefly outline the condition that holds in the steadystate (i.e. what is the relationship between investment and the depreciation of capital?). (2) Suppose that society becomes thriftier,...
1. Consider the Solow model where total national saving (St) is given by the following St = sYt − hKt The term, −hKt, reflects the idea that when wealth (as measured by the capital stock) is higher, saving is lower (Wealthier people have less need to save for the future). (a) Find the steady state values of per worker capital, output, and consumption (b) What is the effect on the steady state of an increase in h
A and B only Consider the Solow growth model with the following production function where y is output. K is capital, s is the productivity and is labor. Assume that 0 < α < 1 Further, suppose that labor grows at a constant rate n. That is. 1 + n. Also, assume that capital depreciates at rate d and that gross investment in capital is fraction s of output. a Letting k-N, obtain the law of motion for capital accumulation...
In the Solow model with a positive rate of population growth n and technological progress z, the steady state level of total real output Y grows at the rate: a. n. b. zero. c. z. d. n + z. In the Solow model with a positive rate of population growth n and technological progress z, the steady state level of per worker real output y grows at the rate: a. n. b. zero. c. z. d. n + z. In...
A hypothetical economy can be described by the Solow growth model. Answer the below questions for this economy by using the following information: ? = √? saving rate (s) = 0.20 depreciation rate (&) = 0.12 initial capital per worker (k) = 4 population growth rate (n) = 0.02 a. What is the steady-state level of capital per worker? b. What is the steady-state level of output per worker? c. What is the level of steady-state consumption per worker? d....