SolowmodelShocks

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

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

View Full Document Right Arrow Icon
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
Background image of page 1

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

View Full DocumentRight Arrow Icon
Background image of page 2
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

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 Right Arrow Icon
Ask a homework question - tutors are online