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Unformatted text preview: steady state (ii) growth rates decline as the economy develops (iii) growth rates become zero in the steady state Note that these properties imply that poor countries should growth faster and catch-up to rich countriesa prediction known as conditional convergence . The conditional is added because the prediction only holds if countries have similar steady stateswhich means similar s , A , and n . To see this, draw (3,16) for two countries on the same graph where the countries have different values of s , A , or n . 2. Testing the Predictions Figures 4.9-4.11...
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This note was uploaded on 02/19/2011 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue University-West Lafayette.
- Spring '08