1. Growth rates. In 2010, U.S. output was $14.7 trillion and Chinese output
was $5.8 trillion. Suppose that from now on, the output of China grows
at an annual rate of 10.5% per year (unlikely), while the output of the
United States grows at an annual rat
1. Consider the Solow model with population growth but no technical progress.
Assume that the savings rate can take two dierent values s1 and s2 ; where
s1 > s2 . The savings rate depends on the level of output per capita (and
therefore the l
1. We have seen in class Kaldors stylized facts of growth in developed countries. The Cobb-Douglas production function is used to replicate fact a.
In this exercise, you are asked to show that the steady state in the Solow
model with technolo