answer all! Consider the Endogenous Growth Model with the representative consumer. The efficiency parameter of human capital accumulation technology is b = 5. The total productivity factor is given by z = 60. Denote by Ht the human capital accumulated in period t, and by ut the time spent working in period t. Assume u0= 0.85 and HO = 1. 1. Compute the consumer consumption Ct for periods 0 and 1. 2. Starting from year 2, the government applies a policy that raises b to 9. Now assume that in face of this increased value of human capital in the economy, the consumer responds optimally by decreasing ut to 0.75. Calculate the consumption Ct for periods 2 and 3.
answer all! Consider the Endogenous Growth Model with the representative consumer. The efficiency parameter of human capital accumulation technology is b = 5. The total productivity factor is given by z = 60. Denote by Ht the human capital accumulated in period t, and by ut the time spent working in period t. Assume u0= 0.85 and HO = 1. 1. Compute the consumer consumption Ct for periods 0 and 1. 2. Starting from year 2, the government applies a policy that raises b to 9. Now assume that in face of this increased value of human capital in the economy, the consumer responds optimally by decreasing ut to 0.75. Calculate the consumption Ct for periods 2 and 3.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:answer all!
Consider the Endogenous Growth Model with
the representative consumer. The efficiency
parameter of human capital accumulation
technology is b = 5. The total productivity
factor is
given by z = 60. Denote by Ht the human
capital accumulated in period t, and by ut the
time
spent working in period t. Assume u0 = 0.85
and HO = 1.
1. Compute the consumer consumption Ct for
periods 0 and 1.
2. Starting from year 2, the government
applies a policy that raises b to 9. Now
assume that in
face of this increased value of human capital
in the economy, the consumer responds
optimally
by decreasing ut to 0.75. Calculate the
consumption Ct for periods 2 and 3.
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