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ps3a_114 - Econ 114 Javier Birchenall Due date Tuesday...

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Econ 114 Javier Birchenall Due date: Tuesday, October 19, 2010 Problem set 3: Population growth and the Solow Model The following problem set includes time derivatives and calculus using concepts brie fl y developed in class and in depth considered in the book. Plan to spend 8 hours on these questions. Please return the problem set on time (next Tuesday during class), remember you have the chance to miss one and only one, use it wisely. If you have any problems regarding the questions please contact me by e-mail: [email protected] . Good luck! Fertility and poverty traps in the Solow model Consider once again the Solow model of economic growth. Assume that the production function is Y = AK α L 1 α , with A as productivity, K as physical capital and with L as population. Total capital increases in the economy if more people invest and it decreases naturally since its use produces depreciation. We de fi ne δ as the depreciation rate or the number of units of capital that are lost in the production process. At a given
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