EC185-PS1

EC185-PS1 - The Theory of Economic Growth Problem set 1...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: The Theory of Economic Growth Problem set 1 Solutions ¨ Omer ¨ Ozak * September 24, 2008 Towards the end of the 16th century potatoes are introduced to Ireland and within a short time period they became the prime agricultural crop in Ireland. Suppose Ireland is in a Malthusian steady-state equilibrium prior to the 16th century. Problem 1. Establish formally its Malthusian steady state level of income and population. Solution: Remember that in the Malthusian model, the level of income in period t is determined by the equation Y t = ( A 1 X ) α L 1- α t where Y t is the level of income, A 1 the level of technology, X the amount of land available and L t the number of workers. Define the level of income per worker as y t ≡ Y t L t = parenleftbigg A 1 X L t parenrightbigg α . Households, in this case Irish ones, are assumed to decide the number of children and the amount of consumption they want to have. 1 An individual in her second period of life in period t takes this decision by solving the following problem: max s.t....
View Full Document

This note was uploaded on 07/06/2009 for the course ECON 185 taught by Professor Galor during the Fall '08 term at Brown.

Page1 / 4

EC185-PS1 - The Theory of Economic Growth Problem set 1...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online