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Question: i am having a hard time with problem 2 any...

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lis technological progress? How doe this differ from the Solow model? ne BLEMS AND A P P LICATION S ose an economy described by the Solow 1. Suphl has te following production function: ain capital share of a third, a aving rate of 24 percent, a depreciation rate of 3 percent, a rate of popula 1n K1 /2(LE)l/2 tion growth of 2 percent, and a rate of labor is in steady state a. At what rates do total output, output per Y = augmenting technological change of 1 percent. It a. For this economy, what is f0? Use your answer to part (a) to solve for the steady-state value of y as a function of s, n, g and δ worker, and output per effective worker grow s., n, g b. Solve for capital per effective worker, out put per effective worker, and the marginal Two neighboring economies have the above production finction, but they have different parameter vaes. Atlantis has a sav of 28 percent d a population growth rate of 1 percen prer year. Xanadu has a saving rate of 10 percent and a population growth rate of 4 percent per year. In both countries, g = 0.02 and δ 0.04. Find the steady-state value of y for each country product of capital. ing rate c. Does the economy have more or less capital than at the Golden Rule steady state? How do you know? To achieve the Golden Rule steady state, does the saving rate need to increase or decrease? d. Suppose the change in the saving rate you described in part (c) occurs. During the transition to the Golden Rule steady state, will the growth rate of output per worker be higher or lower than the rate you derived in 2.LounchRod. An economy has a Cobb-Douglas production function: part (a)? After the economy reaches its new steady state, will the growth rate of output per worker be higher or lower than the rate you derived in part (a)? Explain your answers (For a review of the Cobb-Douglas production fincion, see Chapter 3) The a fiunction, see Chapter 3.) The economy has a I am having a hard time with problem #2, any help would be appreciated. Thank you.

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