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Question: 2 convergence suppose there are 5 countries in the world...

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2. Convergence Suppose there are 5 countries in the world. All 5 have the save production function, investment rate, and depreciation rate s0.3 8 0.1 They differ in only one way: they each start with a different level o capital Countr Malawi Bangladesh Bolivia Mexico Britain 4 16 36 64 2.1. Fill in the column labeled Yo for each country. This is the initial level of GDP. What is the gap in GDP between the richest and poorest country? (That is, what is the difference between GDP in the richest and poorest country?) 2.2. Without doing any math: what does the Solow model predict will be the gap in GDP between the richest and poorest country in the long run? 2.3.Solve for the steady state level of capital for Malawi and add this to the table in the column abeled K. Then fill in the rest of the column (Do we need to do any more math to fill in the rest of the column?)
2.4.Fill in the column labeled Y with the steady-state level of GDP. Does this confirm your prediction from before? 2.5, Calculate the growth rate of GDP from its initial level (%) to the steady state level (Y.). Fill these values into the column labeled g. Then plot the points gagainst Yo, with initial GDP on the horizontal axis and GDP growth on the vertical axis. Is the relationship positive, negative, or zero? Is this what you expected?
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