homework7 2009 solutions

homework7 2009 solutions - ECON 7240 Spring 2009 Homework 7...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ECON 7240 Spring 2009 Homework 7 Solutions 1) a) The capital map is ) 1 )( 1 ( ) 1 ( 1 g n k s k t t + +- = + α α where ρ + = 2 1 s . If n increases by ∆ n , the k t +1 ( k t ) map shifts down everywhere by the factor 2 ) 1 ( n n + ∆ . Meanwhile, α α- + +- = 1 1 ) 1 )( 1 ( ) 1 ( * g n s k . ) 1 ( 1 ) 1 ( 1 1 * 1 1 1 1 1 < + +--- = ∂ ∂---- α α α α n g s n k Thus steady state capital decreases as the rate of population growth increases. b) The map shifts down by B everywhere with ) 1 )( 1 ( ) 1 ( 1 g n k s B k t t + +- = + α α . Meanwhile, α α- + +- = 1 1 ) 1 )( 1 ( ) 1 ( * g n Bs k ECON 7240 Spring 2009 . ) 1 )( 1 ( ) 1 ( 1 1 * 1 1 1 + +-- = ∂ ∂--- α α α α α B g n s B k Thus if productivity decreases, steady-state capital decreases. c) If the share of capital decreases, this has two effects. k t α will be flatter for most k t but get steeper for k t close to zero. close to zero....
View Full Document

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.

Page1 / 4

homework7 2009 solutions - ECON 7240 Spring 2009 Homework 7...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online