Example%20Long%20Solow%20Problem

# Example%20Long%20Solow%20Problem - Example Long Solow...

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Example Long Solow Problem ܻ = ܭ ܰ The savings rate is s, the depreciation rate is δ, and there is no population or technology growth. 1) Find GDP per worker as a function on capital per worker. 2) Find the steady state level of capital per worker. 3) Find the steady state level of GDP per worker. 4) Find steady state level of capital per worker, steady state level of GDP per worker, savings per worker, and consumption per worker when the savings rate is 10% and the depreciation rate is 5%. 5) On a graph, draw the steady state and label the axes, curves, and all of the items you found in part 4. 6) Explain why the answers you found in part 4 constitute a steady state? (i.e. what is a steady state) 7) Explain what the golden rule level of savings is. 8) Find the golden rule level of savings. Answers: 1) Find GDP per worker as a function on capital per worker. ܻ ܰ = ܭ ܰ ܰ = ܭ ܰ ି = ܭ ܰ = ( ܭ ܰ ) 2) Find the steady state level of capital per worker. Savings = Investment

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Example%20Long%20Solow%20Problem - Example Long Solow...

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