Consider an economy that has access to a production technology Y = AKαL1−α where Y is output, A is the level of technology, K is capital and L is the amount of labor in the economy. Capital evolves according to K˙ = sY (thus, the depreciation rate δ = 0). The x˙ population growth rate is n. (Throughout, gx = x , where x can be any of the variables in the model.) (a) Assume that technology is determined by A = BKφ What sort of endogenous growth model is this? Find K/K in terms of the K, L, and other parameters of the model.
Consider an economy that has access to a production technology Y = AKαL1−α where Y is output, A is the level of technology, K is capital and L is the amount of labor in the economy. Capital evolves according to K˙ = sY (thus, the depreciation rate δ = 0). The x˙ population growth rate is n. (Throughout, gx = x , where x can be any of the variables in the model.) (a) Assume that technology is determined by A = BKφ What sort of endogenous growth model is this? Find K/K in terms of the K, L, and other parameters of the model.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Consider an economy that has access to a production technology
Y = AKαL1−α
where Y is output, A is the level of technology, K is capital and L is the amount of labor in the economy. Capital evolves according to K˙ = sY (thus, the
(a) Assume that technology is determined by A = BKφ
What sort of endogenous growth model is this? Find K/K in terms of the K, L, and other parameters of the model.
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