SolowmodelShocks

# SolowmodelShocks - value K t ↓ No no shift No no change...

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

SUMMARY Per-worker production function: y=Ak α y = output per worker Required investment per worker: i = ( δ +n)k i = investment per worker Actual investment per worker: s*Ak α k = capital per worker Marginal product of labor: MPL=(1- α )*A*k α A = total factor productivity Marginal product of capital: MPK=( α *A)/k 1- α δ = depreciation rate Steady-state capital per worker: k ss = [(s*A)/( δ +n)] 1/(1- α ) n = population growth rate s = savings rate "SHOCKS" Any shifts? Which curve(s)? Change in steady state values? Impact on k ss ? Impact on y ss ? Impact on i ss ? Impact on c ss ? Impact on MPK? MPK=( α *A)/k 1- α Impact on MPL? MPL=(1- α )*A*k α other comments L t No no shift No no change in steady- state value but. .. (see class notes) --- --- --- SR: MPK LR: MPK SR: MPL LR: MPL As L t ↓→ k rises at this k, required investment exceeds actual investment k falls back to its steady state

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: value K t ↓ No no shift No no change in steady-state value but. .. (see class notes)---------SR: MPK ↑ LR: MPK ↓ SR: MPL ↓ LR: MPL ↑ As K t ↓→ k falls → at this k, required investment is less than actual investment → k rises back to its steady state value s ↑ Yes Actual investment per worker curve-- s*A*k α Yes increase increase increase up or down depending on…see class notes decrease increase see class notes A ↑ Yes ·per-worker production fcn. (y=A*k α ) ·Actual investment per worker curve ( s*A*k α ) ·consumption per worker curve- c Yes increase increase increase increase no change increase see class notes n Yes ·Required investment per worker curve-- i = ( δ +n)k ·consumption per worker curve- c Yes do this on your own...
View Full Document

{[ snackBarMessage ]}

### Page1 / 2

SolowmodelShocks - value K t ↓ No no shift No no change...

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

View Full Document
Ask a homework question - tutors are online