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Unformatted text preview: -convergence theory say that poorer countries should catch up to richer countries, conditional convergence theory says if everything was the same, poor countries should catch up to rich countries.-Further you are from your steady state, faster you should be growing Can government affect the savings rate?-Should the government intervene? o Governments intervene in terms of savings rate all the time o Force savings Optimal Savings Rate-Do we care about income? o We dont care about income, we care about consumption-What savings rate would reduce consumption? o Golden rule savings rate Golden rule steady state-Interest rate equal to savings rate-f(k) = interest rate in economy Does a constant saving rate make sense? (in solow model)-assumes constant savings-...
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This note was uploaded on 02/15/2011 for the course ECON 307 taught by Professor Jackson during the Winter '11 term at Wilfred Laurier University .
- Winter '11