Q: Consider the following model with physical and human capital:
Consider the following model with physical and human capital: where aK and aH are the fractions of the stocks of physical and human capital used in the education sector. This model assumes that huma...
See AnswerQ: Suppose that Y(t) =K(t)α
Suppose that Y(t) =K(t)α[(1−aH)H(t)]β, H(t)=BaHH(t), and K(t)=sY(t). Assume 0
See AnswerQ: Consider the model of Section 5.3 without any shocks.
Consider the model of Section 5.3 without any shocks. Let y∗, k∗, c∗, and G∗ denote the values of Y/(AL), K/(AL), C/(AL), and G/(AL) on the balanced growth path; w∗ the value of w/A; ∗ the value of L/...
See AnswerQ: Consider the model of Section 5.5. Assume for simplicity
Consider the model of Section 5.5. Assume for simplicity that n=g=A=N=0. Let V(Kt,At), the value function, be the expected present value from the current period forward of lifetime utility of the repr...
See AnswerQ: Suppose technology follows some process other than (5.8)
Suppose technology follows some process other than (5.8) (5.9). Do st = ˆ s and t = ˆ for all t continue to solve the model of Section 5.5?
See AnswerQ: Suppose that each worker must either work a fixed number of hours
Suppose that each worker must either work a fixed number of hours or be unemployed. Let CE i denote the consumption of employed workers in state i and CU i the consumption of unemployed workers. The f...
See AnswerQ: Consider the model of Section 5.5. Suppose, however
Consider the model of Section 5.5. Suppose, however, that the instantaneous utility function, ut, is given by ut = lnct+b(1−t )1−γ/(1−γ),b >0,γ>0, rather than by (5.7) (see Problem 5.4). (a) Find the...
See AnswerQ: (a) If the ~ At’s are uniformly 0 and if
(a) If the ~ At’s are uniformly 0 and if lnY t evolves according to (5.39), what path does lnY t settle down to? (Hint: Note that we can rewrite [5.39] as lnY t−( n + g)t =Q + α[lnY t−1 −(n+g)(t −1)]+...
See AnswerQ: Consider the equation of motion for capital, Kt+1 =
Consider the equation of motion for capital, Kt+1 = Kt+Kα t (AtLt)1−α−Ct −Gt −δKt. (a)(...
See AnswerQ: Let A0 denote the value of A in period 0, and
Let A0 denote the value of A in period 0, and let the behavior of ln A be given by equations (5.8) (5.9). (a) Express ln A1, lnA2, and ln A3 in terms of ln A0, εA1, εA2, εA3, A, and g. (b) In light of...
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