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Unformatted text preview: k * go higher than k * gr ? 2) Consider the Solow model for two economies. Each shares a Cobb-Douglas production function and the following parameters: = 1/3, = 0.058, g = 0.015, n = 0.01, and s = 0.25. Furthermore, for both A (0) = L (0) = 1. However, the first country starts relatively poor with K 1 (0) = 0.01 and the second relatively rich with K 2 (0) = 0.1. a) Using Excel or comparable software, plot on the same graph the path of k 1 ( t ) and k 2 ( t ) for t = 0 to 100. b) Plot a graph of y 1 ( t ) and y 2 ( t ) for t = 0 to 100. c) Plot a graph of c 1 ( t ) and c 2 ( t ) for t = 0 to 100. d) Plot a graph of y 1 ( t )/ y 2 ( t ) for t = 0 to 100. e) Based on your results, how well do you think the Solow model can account for the disparity of incomes across countries?...
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This note was uploaded on 01/09/2011 for the course ECON 7230 taught by Professor Feigenbaum during the Spring '10 term at Utah Valley University.
- Spring '10