Unformatted text preview: (instead of the usual CobbDouglas function). Let the labor force be constant, denoted L . (1) Verify that now K t 1 K t sA t K t 4 L − K t . (2) What is the transitional equation (i.e., one pertaining to the transition of k , capital per worker) now? (Hint: Divide the equation in (1) by L and note k t K t / L .) (3) Let s 0.1 and 0.2 and A t 1 all t . Let k 1. Find the values of k 1 and k 2 . Also, find the steady state k . (As in the usual Solow model, when there is no technological progress, the economy is in a steady state from date t if k t 1 k t .)...
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 Spring '07
 MBIEKOP
 Economics, Macroeconomics, Marginal product, rental rate, 4L, Solow

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