WS12 - Final Solutions

# WS12 - Final Solutions - !. Growth with a more general...

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!. Growth with a more general production function, Part I a. Yes. b. Yes. c. Yes. d. YIN (KIN)1/3 e. In steady state, sf(KIN) :::: 15KIN, which, given the production function in part (d), implies: KIN=(s/15)3!2 f. YIN =(s/8)1/2 g. YIN=2 h. YIN =i!2 .2. Growth with a more general production function, Part II a. Substituting from 5e: KiN=! b. Substituting from Sf: YIN=I c. KIN=.35; YIN=.7! d. Using equation (15.3), the evolution of KIN is: 0.9, 0.82, 0.75. The evolution of YIN is: 0.97,0.93, 0.9! 3. Searching for the Golden Rule a. In the steady state sY= 15 K Divide both sides by N, then substituting the production function yields s * 0.5 * (KIN) 15 KiN KIN = (0.5 * (s/15) ) 2 as the steady state capital stock per worker Then substitute this value into the production function YIN = 0.5 (KIN)1!2 0.5 * 0.5 * s/15 = 0.25 s/15 b. Consumption is output per worker minus savings per worker CIN (l-s) 0.25 5/8

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c. My spreadsheet looks like s Delta c 0.1 0.05 0.45 0.2 0.05 0.8 0.3 0.05 1.05 0.4 0.05
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## This note was uploaded on 12/02/2011 for the course ECON eco200 taught by Professor Wolfson during the Spring '11 term at University of Toronto- Toronto.

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WS12 - Final Solutions - !. Growth with a more general...

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