{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

451_Problem_Set_1

# 451_Problem_Set_1 - Problem Set#1 Course 14.451 Macro I TA...

This preview shows pages 1–2. Sign up to view the full content.

1 Problem Set #1 Course 14.451 – Macro I TA: Todd Gormley, [email protected] Distributed: February 9, 2005 Due: Wednesday, February 16, 2005 [in class] 1. Human Capital in the Solow Model (based on Mankiw, Romer & Weil 1992) Assume that the production function is given by: ( 29 a l a l - - = 1 Y K H AL where Y is output, K is physical capital, H is human capital, A is the level of technology, and L is labor. Assume a 0 , l 0 and a l + < 1 . L and A grow at constant rates n and g , respectively. Output can be used on a one-for-one basis for consumption or investment in either type of capital. Both types of capital depreciate at the rate d . Assume that gross investment in physical capital is the fraction K s of output and that gross investment in human capital is the fraction H s of output. (a) Let / k K AL and = / h H AL . Obtain the laws of motion for k and h . (b) What are the steady-state values of physical capital, human capital, and output, all per unit of effective labor?

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 2

451_Problem_Set_1 - Problem Set#1 Course 14.451 Macro I TA...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online