Homework 6 (Due March 13)
1. Refer to Question 5 in Homework 5. Maintain everything there but now set
0.3.
(1) Compute
k
t
,for
t
from 0 to 2. Then compute the growth rate of
k
,for
t
from1to2
.
(2) Compute the steady
k
and
y
.
2. Refer to Question 5 in Homework 5. Maintain everything there but now set
A
t
10
1.01
t
.
(1) Suppose the economy is already in the steady state at
t
0. Compute
k
0
,
k
1
,and
y
0
.
Then compute the national saving rate at date 0.
(As in the Solow model, in case
A
t
1
t
A
0
, the economy is in the steady state at
t
if
y
t
1
/
y
t
k
t
1
/
k
t
, which implies
k
t
1
/
k
t
1
1
1
−
. To solve the steadystate
k
t
, substitute the
steadystate relationship
k
t
1
k
t
1
1
1
−
into the transitional equation
k
t
1
1
−
1
−
A
t
k
t
. Also, because
Nk
t
1
−
Nk
t
is the national savings at
t
,
N
k
t
1
−
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This note was uploaded on 04/02/2009 for the course ECON 3140 taught by Professor Mbiekop during the Spring '07 term at Cornell.
 Spring '07
 MBIEKOP
 Macroeconomics

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