Unformatted text preview: taxes of amount G ( t ) per unit of eﬀective labor per unit time; thus the government always runs a balanced budget. (a) Write down the households’ budget constraint. (b) Determine whether the ˙ c = 0 line would change or not. (c) Determine whether the ˙ k = 0 line would change or not. (d) Discuss, using a graph, the transition from the initial balanced-growth path to the new balanced growth path. 2. Romer 2.6 1...
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- Fall '09
- Economics, balanced growth path, balanced-growth path, Toronto Mississauga Department, Macro Prof. Kambourov, University of Toronto Mississauga Department of Economics