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Unformatted text preview: (that is, capital per effective worker has converged to its “long run” value in both countries). What would you predict for the following variables? a. The growth rate of total income. b. The level of income per worker. In answering these questions make sure to distinguish two scenarios: 1. The level of education is different, but the growth rates are the same; 2. The growth rates are different. Would your answer under scenario 2 change if instead of education the countries would have different total factor productivity? That is in Y= A F(K,L) A would be higher or growing faster in one of these countries?...
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This note was uploaded on 04/02/2011 for the course ECON 3020 taught by Professor Mertens during the Spring '08 term at Cornell.
- Spring '08