Econ2102S2_Tutorial_2s[1]

In the case of use the fact that to obtain a solution

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Unformatted text preview: f the current ! $ level of capital. Write your answer in terms of the and the parameters of the # model " only.(d) An increase. in A looks like it is a free lunch – there is no cost to it. In the case of (Use the fact that !) to obtain a solution for the growth rate of per-capita GDP as a function of the current a relevant rules are that if ! then ! # and ! has to come at the cost of a lower (initial) level (a)Then increase in the investment rate, it # then and the parameters of the model ! level of capital. Write your answer in terms of the of % consumption. ! " " only. (Use the fact that !) Since A and L are constant, they have zero growth rates. So.we get !"# Question 5.8 (b)Since L is constant the growth rate of per-capital output is just equal to the (a)The output. So we can use the result from if ! then !# and ! # then growth rate of totalrelevant rules are that (a) ! % " " ! Since A and L are constant, they have zero growth rates. So we get !"# " " (b)Since L is constant the growth rate of per-capital output is just equal to the growth rate of total output. So we can use the result from (a) 6 !"# Note that " ! # " so " ! # " or " ! # " Now use the solution for K* from lectures " ! If we substitute this into the above equation we get " ! # " or !$ % Finally ! " # &$ % ' Note that when K(t) is very low (a country is very poor) the Solow-Swan model implies that it should have a relatively high growth rate. 7...
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This document was uploaded on 03/15/2014.

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