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Consider the endogenous growth model

Consider the endogenous growth model

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider the endogenous growth model. Suppose that the budget constraint of the consumer is given by C = wuH^s The human capital accumulation equation is given by H's = b(1 -u)H^s %3D The production function is Y = zuH^d. Obtain expressions for growth rates of consumption and human capital in equilibrium. Also discuss the economic significance of this model in the context of convergence. Poor countries don't seem to catch up the rich ones. Does endogenous growth model allow us to obtain this result theoretically? (please do not give me a copy/paste answer, the other ones are wrong, which is why the question is reposted)
Transcribed Image Text:Consider the endogenous growth model. Suppose that the budget constraint of the consumer is given by C = wuH^s The human capital accumulation equation is given by H's = b(1 -u)H^s %3D The production function is Y = zuH^d. Obtain expressions for growth rates of consumption and human capital in equilibrium. Also discuss the economic significance of this model in the context of convergence. Poor countries don't seem to catch up the rich ones. Does endogenous growth model allow us to obtain this result theoretically? (please do not give me a copy/paste answer, the other ones are wrong, which is why the question is reposted)
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