Consider an economy described by the Solow model with the following production function: Y = F(K, L) = K“ (L)!-« L grows at the rate n, the depreciation rate is d, and the country saves a constant fraction s of its income. The change in capital per-worker is given by Ak = sy – (n + 8)k. (a) Derive the per-worker production function. (b) Assuming population growth equals n and the depreciation rate equals 8, find the steady state level of capital per worker. It will depend on a, s, n and 8. Imagine the economy begins at the steady state you found in part b. Then there is a war that destroys a substantial amount of the economy's capital. The war does not affect the size of the labor force, population growth, the depreciation rate, or the saving rate. c) What is the immediate effect of the war on output per worker? Explain.

Consider an economy described by the Solow model with the following production function: Y = F(K, L) = K“ (L)!-« L grows at the rate n, the depreciation rate is d, and the country saves a constant fraction s of its income. The change in capital per-worker is given by Ak = sy – (n + 8)k. (a) Derive the per-worker production function. (b) Assuming population growth equals n and the depreciation rate equals 8, find the steady state level of capital per worker. It will depend on a, s, n and 8. Imagine the economy begins at the steady state you found in part b. Then there is a war that destroys a substantial amount of the economy's capital. The war does not affect the size of the labor force, population growth, the depreciation rate, or the saving rate. c) What is the immediate effect of the war on output per worker? Explain.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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Question

Consider an economy described by the Solow model with the following production
function:
Y = F(K, L) = K“ (L)'-«
L grows at the rate n, the depreciation rate is 8, and the country saves a constant fraction s
of its income. The change in capital per-worker is given by Ak = sy – (n+ 8)k.
(a) Derive the per-worker production function.
(b) Assuming population growth equals n and the depreciation rate equals 8, find the
steady state level of capital per worker. It will depend on a, s, n and 8.
Imagine the economy begins at the steady state you found in part b. Then there is a war
that destroys a substantial amount of the economy's capital. The war does not affect the
size of the labor force, population growth, the depreciation rate, or the saving rate.
c) What is the immediate effect of the war on output per worker? Explain.
d) After the war, is the growth rate of output per worker higher or lower than it was in
steady state? Explain.
e) How does the war affect steady state output per worker? Explain.

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an economy is described by the Solow-Swan model with the following variables, E(t)=1 The saving rate is 0.41 per year. Labor's share of income is 0.44. The growth rate of labor efficiency is 0.03 per year. The growth rate of the labor force is 0.02 per year Depreciation is 0.09 per year. calculate the steady-state value of the capital-to-labor ratio, K/L Enter your answer to two places after the decimal.
I need help soon a possible I have one and half.
a) Consider two countries that have the same parameters and exogenous variables (i.e. they have the same values for s¯, d¯, L¯ etc). Country A starts with a level of capital above the steady state. Country B starts below the steady state. First, plot the Solow diagram, explain why country B will grow but country A will shrink. b) Solve for steady state level of capital per person, k∗.
= 2. Consider a Solow growth model in which the production function is Yt AK²N₁¹/2, where A = 1. Moreover, assume that the depreciation rate is d = 0.02, the rate of population growth is n = 0.02, and the saving rate is s = = 0.2. a. Compute the value of the capital stock per worker in steady state. b. Draw a graph that represents the steady-state equilibrium of the model. c. Suppose that the capital-labor ration in year t is 90. What will the level of the capital- labor ratio be in year t+1? Will it increase or decrease in future periods? Explain. d. Compute the rate of change of the capital labor ratio between time t and t + 1. How does it compare to the rate of growth of the capital-labor ratio in steady state?
I need help soon as possible
. This part considers a modified version of the Solow growth model. Suppose the production function is given by F(K,bN) = K°(bN)1-a where b is the labour augmenting technology, which grows at a rate f, i.e., b+1 = (1+ f)b. For simplicity, assume that the total factor productivity z = 1, and the population is constant, i.e., N, = N for all t. The rest of the model is the same as in the standard Solow model in the textbook. Especially, the aggregate capital stock evolves according to Kt+1 = I4 + (1 – d)Kt. And assume that the economy is still closed, and there is no government. For any aggregate variable X, let the lower case letter a be the variable per effective unit of worker; that is a = *. Show that the production technology specified above satisfies the assumption of con- stant returns to scale.