Ps4_101 - Econ 101 Javier Birchenall Due date Tuesday Problem set 4 The Solow model The following problem set will acquaint you with some basic

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Econ 101 Javier Birchenall Due date: Tuesday, November 10, 2009 Problem set 4: The Solow model The following problem set will acquaint you with some basic dynamic aspects used in macroeconomics. Plan to spend 6 hours (maybe more) on these questions. Please return the problem set on time (next Thursday during class), remember you have the chance to miss one and only one, use it wisely. If you have any problems regarding the questions please contact me or your TA immediately. Good luck! Please remember to show your work and write your section. I. The Solow model The Solow model is an important formal model of economic growth. Assume that the production function is Y = zF ( K, N )= zK α N 1 α . The previous production function has constant returns to scale so we can write in per capita terms. (a) Show that income per worker y = Y/N is given by: y = zk α , with k = K/N . The evolution of capital is given by: K 0 = I +(1 d ) K . Assume
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This note was uploaded on 12/25/2009 for the course ECON 101 taught by Professor Dumbass during the Fall '08 term at UCSB.

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