{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Midterm4020_2009+solutions

# Midterm4020_2009+solutions - Midterm Exam&Econ 4020 29...

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

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.

Unformatted text preview: Midterm Exam &Econ 4020 29 October 2009 Department of Economics York University 1. The Solow model [10 marks] Consider the Solow model, where k evolves according to & k = & ( k ) , where & ( k ) = sk & & ( n + g + ¡ ) k . The linearization of this equation around the steady-state level of k , denoted k ¡ , is given by & k = ( k ) , where ( k ) = & ( k ¡ ) + & ( k ¡ ) ( k & k ¡ ) . (a) Find an expression for ( k ) as the product of ( k & k ¡ ) and something involving ¢ , n , g , and ¡ . [5 marks] (b) Find an expression for the ¡gap¢at time t , given by k ( t ) & k ¡ . Your answer should be the product of two factors: (1) the initial gap, k (0) & k ¡ ; and (2) something that involves time, t , and the parameters ¢ , n , g , and ¡ . To get there you must solve the linear di/erential equation & k = ( k ) . Hint: if & x = ax , then x ( t ) = x (0) e at . [5 marks] 2. The Diamond model [10 marks] Consider a version of the Diamond model where the interest rate ( r ) and the wage rate ( w ) are constant, and there is no technological progress or population growth....
View Full Document

{[ snackBarMessage ]}

### Page1 / 8

Midterm4020_2009+solutions - Midterm Exam&Econ 4020 29...

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

View Full Document
Ask a homework question - tutors are online