Economics 302
Spring 2008
Homework #4
Homework will be graded for both content and neatness.
This homework requires the
use of Microsoft Excel.
Please put your section number or discussion section meeting
time on the front page when turning in your homework.
1) Consider the Solow Growth model without population growth or technological change.
The parameters of the model are as described in the table below:
Year
s
δ
k
y
c
i
depreciation
change in k
1
0.2
0.05
20
where s is the saving rate, δ is the depreciation rate, k is the capital stock per worker, y is
output per worker, c is consumption per worker, and i is investment per worker.
a) Assume that our production function is given by
3
/
2
3
/
1
L
K
Y
=
.
Rewrite this
production function in terms of output per worker as a function of capital per worker.
b) With the production function in a), fill out the first row of the table above.
c) Again using the production function from a), find the steady state level of capital in
this economy.
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 Spring '07
 GOLD
 Economics, Macroeconomics, Steady State, Grand Fenwick

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