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Question: 3 the botswana exception suppose that botswana and ghana both...

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3. The Botswana Exception Suppose that Botswana and Ghana both have the production function and parameters s 0.1 8-0.1 where Af represents the quality of institutions. Assume A196o 1 for Botswana and A196o -2 for Ghana. 3.1. What is the steady-state level of capital and output in each country in 1960? Draw and label a steady-state diagram. 3.2.Between 1960 and 1980, policies in Ghana deteriorate. The government of Ghana introduces laws that destroy the incentive of cocoa farmers to be productive. As a result, A1980 isi Ghana. Meanwhile, Botswanas institutions improve after independence. It transitions to a stable parliamentary democracy with free and fair elections. It passes laws that let it export diamonds efficiently and without political corruption. As a result, A198o is 4 in Botswana. What is the steady-state level of capital and output in each country in 1980? Draw and label a new steady-state diagram. Assume that, aside from A!, all other parameters remain the same.
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