handout1 - Handout 1 1. CRS: Cobb-Douglas function A 2 K 2...

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Handout 1 1. CRS: Cobb-Douglas function A  2 K  2 L 1 A 2 K 2 1 L 1 2 A K L 1 . 2. Constant factor shares: Cobb-Douglas function The capital income MPK K A K 1 L 1 K A K L 1 , and The labor income MPL L 1  A K L L 1 A K L 1 . 3. Growth accounting: Take logarithms of both sides of Y AK L 1 , which gives ln Y ln A ln K 1 ln L . Then differentiate the last equation, which gives dY Y dA A dK K 1 dL L . Then replace dY with Δ Y , dK with Δ K ,and dL with Δ L . 4. Equations in the Solow model. Divide by
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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 University (Engineering School).

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