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Unformatted text preview: EC390 Fall 2009 Ke Pang Problem Set #3 Due: Tuesday, November 3 in class Be sure to show your work and the reasoning used to obtain your answer. The following information must be on your assignment: name, student number, session (A: 11:30-12:50; B: 1:00-2:20) . 1. Consider the Solow model with population growth and technological progress. The production function is given by Y = K 1 2 ( AN ) 1 2 . (a) Write the production function in per effective worker terms. (b) Solve for the steady state value of capital per effective worker ( ˆ k * ) as a function of s , δ , g N , and g A . (c) Suppose s = 0 . 2, δ = 0 . 10, g N = 0 . 01, and g A = 0 . 02. Calculate the steady state values of capital per effective worker ( ˆ k * ). (d) Consider a country called Tusa, which starts with ˆ k 1 = 2 and A 1 = 1 in year 1. Calculate Tusa’s output per effective worker, and output per worker for year 1: ˆ y 1 and y 1 . Then, calculate the change in its capital per effective worker in year 1: Δ ˆ k...
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This note was uploaded on 11/01/2009 for the course EC EC 390 taught by Professor Profkepang during the Spring '09 term at Wilfred Laurier University .
- Spring '09