Macro1_PS6 - Macroeconomics 1. Master APE. 2010-2011. PS6...

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Unformatted text preview: Macroeconomics 1. Master APE. 2010-2011. PS6 Prof. Xavier Ragot & Gilles Saint-Paul / T.A : Eric Monnet 1 Convergence in the neoclassical model and the 'augmented Solow model'. This problem is based on Mankiw, Romer and Weil, 1992, (available on the web- page of the course). It examines the derivation of the convergence equation you have derived in class, and studies the implications for the convergence hypothesis of the 'augmented Solow model'. Consider rst the traditional neoclassical model where output is given by Y t = ( A t L t ) α K 1- α t . The technology grows at rate x , the population at rate n , and the stock of capital depreciates at rate δ . There is a constant saving rate s . Thus we have in particular : ˙ K t = sY t- δK t , where ˙ K t = dK t /dt 1- Write the variables in terms of `e ciency units of labor', that is y t = Y t / ( A t L t ) and k t = K t / ( A t L t ) ....
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This note was uploaded on 01/12/2011 for the course ECO 010023 taught by Professor Mrraggillpol during the Fall '09 term at Paris Tech.

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Macro1_PS6 - Macroeconomics 1. Master APE. 2010-2011. PS6...

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