Q: Suppose that the growth rate of some variable, X, is
Suppose that the growth rate of some variable, X, is constant and equal to a > 0 from time 0 to time t1; drops to 0 at time t1; rises gradually from 0 to a from time t1 to time t2; and is constant and...
See AnswerQ: Describe how, if at all, each of the following developments
Describe how, if at all, each of the following developments affects the break-even and actual investment lines in our basic diagram for the Solow model: (a) The rate of depreciation falls. (b) The rat...
See AnswerQ: Consider an economy with technological progress but without population growth that is
Consider an economy with technological progress but without population growth that is on its balanced growth path. Now suppose there is a one-time jump in the number of workers. (a) At the time of the...
See AnswerQ: Suppose that the production function is Cobb Douglas. (a
Suppose that the production function is Cobb Douglas. (a) Find expressions for k∗, y∗, and c∗ as functions of the parameters of the model, s, n, δ, g, and α. (b) What is the golden-rule value of k? (c...
See AnswerQ: Consider a Solow economy that is on its balanced growth path.
Consider a Solow economy that is on its balanced growth path. Assume for simplicity that there is no technological progress. Now suppose that the rate of population growth falls. (a) What happens to t...
See AnswerQ: Find the elasticity of output per unit of effective labor on the
Find the elasticity of output per unit of effective labor on the balanced growth path, y∗, with respect to the rate of population growth, n. IfαK(k∗) = 1 3 , g = 2%, and δ = 3%, by about how much does...
See AnswerQ: Suppose that investment as a fraction of output in the United States
Suppose that investment as a fraction of output in the United States rises permanently from 0.15 to 0.18. Assume that capital’s share is 1 3 . (a) By about how much does output eventually rise relati...
See AnswerQ: Assume that both labor and capital are paid their marginal products.
Assume that both labor and capital are paid their marginal products. Let w denote ∂F(K,AL)/∂L and r denote [∂F(K,AL)/∂K]−δ. (a) Show that the marginal product of labor, w, is A[ f(k)−kf (k)]. (b) Show...
See AnswerQ: Consider the model of Section 11.4. (a
Consider the model of Section 11.4. (a) Use equations (11.65) and (11.69), together with the fact that VV =0 in equilibrium, to find an expression for E as a function of the wage and exogenous paramet...
See AnswerQ: This question asks you to use a Solow-style model to
This question asks you to use a Solow-style model to investigate some ideas that have been discussed in the context of Thomas Piketty’s recent work (see Piketty, 2014; Piketty and Zucman, 2014; Rognli...
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