Q: Consider the model of Section 3.3 with β +θ
Consider the model of Section 3.3 with β +θ =1 and n =0. (a) Using (3.14) and (3.16), find the value that A/K must have for gK and gA to be equal. (b) Using your result in part (a), find the growth ra...
See AnswerQ: Suppose the economy is described as in Problem 7.1,
Suppose the economy is described as in Problem 7.1, and assume for simplicity that m is a random walk (so mt = mt−1 +ut, where u is white noise and has a constant variance). Assume the profits a firm...
See AnswerQ: Consider a policymaker whose objective function is ∞ t=0 βt
Consider a policymaker whose objective function is ∞ t=0 βt(yt −aπt2/2), where a >0 and 0
See AnswerQ: Consider the model of Section 3.3 with β +θ
Consider the model of Section 3.3 with β +θ>1 and n > 0. (a) Draw the phase diagram for this case. (b) Show that regardless of the economy’s initial conditions, eventually the growth rates of A and K...
See AnswerQ: Suppose that output is given by equation(3.22),
Suppose that output is given by equation(3.22), Y(t)=K(t)α [A(t)L(t)]1−α; that L is constant and equal to 1; that K(t)=sY(t); and that knowledge accumulation occurs as a side effect of goods productio...
See AnswerQ: Consider the model of Section 3.5. Suppose, however
Consider the model of Section 3.5. Suppose, however, that households have constant-relative-risk-aversion utility with a coefficient of relative risk aversion of θ. Find the equilibrium level of labor...
See AnswerQ: Suppose that policymakers, realizing that monopoly power creates distortions, put
Suppose that policymakers, realizing that monopoly power creates distortions, put controls on the prices that patent-holders in the Romer model can charge for the inputs embodying their ideas. Specifi...
See AnswerQ: Consider the model of Section 4.1 with the assumption that
Consider the model of Section 4.1 with the assumption that G(E) takes the form G(E)=e φE. (a) Find an expression that characterizes the value of E that maximizes the level of output per person on the...
See AnswerQ: Suppose the true relationship between social infrastructure (SI) and log
Suppose the true relationship between social infrastructure (SI) and log income per person (y) isyi =a +bSIi+ei. There are two components of social infrastructure, SIA and SIB (with SIi = SIA i +SIB i...
See AnswerQ: Briefly explain whether each of the following statements concerning a cross country
Briefly explain whether each of the following statements concerning a cross country regression of income per person on a measure of social infrastructure is true or false: (a) ‘‘If the regression is e...
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