tutorial6engl

tutorial6engl - PROF. DR. MICHAEL FUNKE Hamburg, 17....

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P ROF . D R . M ICHAEL F UNKE Hamburg, 17. November 2009 D IPL . V.W H AO Y U Tutorial 6 „Macroeconomics“ (Winter 2009/10) 1. Deficits and the capital stock. For the production function, Y= N K , equation (11.8) gives the solution for the steady-state capital stock per worker. a. Retrace the steps in the text that derive equation (11.8). b. Suppose that the saving rate, s, is initially 18% per year, and the depreciation rate, δ , is 18%. What is the steady-state capital stock per worker? What is steady-state out-put per worker? c. Suppose that there is a government deficit of 6% of GDP and that the government eliminates this deficit. Assume that private saving is unchanged so that national saving increases to 24%. What is the new steady-state capital stock per worker? What is the new steady-state output per worker? How does this compare to your answer to part (b)? 2. Feldstein-Horioka Puzzle. In exercise 1, it implicitly assumes a closed economy, because the
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This note was uploaded on 12/21/2011 for the course ECON 214 taught by Professor Bayemichael during the Spring '09 term at HKU.

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tutorial6engl - PROF. DR. MICHAEL FUNKE Hamburg, 17....

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