Consider two identical economies, A and B, that differ only in their known growth rates of the money supply given by zĄ and ZB. Assume ZĄ > ZB. Where is output higher?
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- Assume there is a second economy ( country B ) with everything identical to country A except for the rate of population growth , which is 2 percent . Answer the following questions for country B. Assume both countries start a k = 0 , which country grows more in the short run ( before steady state is reached ) , as given by the rate of growth of output per worker ? ( hint : the further away from steady state , the faster the growth towards it ). O. Country A O. Same for both O. Country BPopulation Growth and Technological Progress – Work It Out PLEASE WRITE ANSWERS CLEARLY An economy has a Cobb-Douglas production function: Y = K“(LE)'-a The economy has a capital share of 0.30, a saving rate of 42 percent, a depreciation rate of 4.00 percent, a rate of population growth of 5.25 percent, and a rate of labor-augmenting technological change of 3.5 percent. It is in steady state. b. Solve for capital per effective worker (k*), output per effective worker (y*), and the marginal product of capital. k* = y* = marginal product of capital =is it true or false that the growth rate of the GDP per worker for an economy where the capital to output ratio is constant represent the long run economic growth? why
- ECO 4218 – Economics of Growth Solow Model Exercise Suppose that the production function of an economy is characterized by the following Cobb- Douglas production technology Y = AK“L²-«, where Y is the aggregate output, A is the level of technology, K is the capital stock, L is the labor and 0 0, show the step by step derivation of the fundamental equation of growth (using per worker capital, k) c. Find the steady-state values of capital per labor (kss), output per labor (yss) and consumption per labor (Css). Note: Take kss = 0 as given, you don't have to show that it is %3D true. d. What would be the effect of s, 91, 8 and a on yss? e. What is the golden rule of saving rate? Hint: Use css you found on part (c) f. Find steady-state values of k ss, Yss and css if s = 0.2, gı = 0.01, a = 0.5 and 8=0.04A “miraculous" Asian economy has an aggregate wage bill of 300 billion dollars and an aggregate GDP of 500 billion. The annual growth rate of aggregate GDP for this economy over the last 10 years was 7 percent (that is AY/Y=0.07) and the growth rate of labor was 6 percent (AL/L=0.06). Imagine that the production function is given by the standard Cobb-Douglas 1-a AK“L-. Y = Is the growth rate of technology positive or negative? Does your result in (b) make sense? d. The actual truth is that the growth rate of capital was one half of what it announced. That is, instead of 12% the growth rate of capital was only 6%. What was the true rate of productivity growth? What did the government accomplish by inflating the capital numbers? С. е.Assume we have two economies. Economy A has a level of GDP per capita of Ya(0) which is higher than Yb(0) but it is growing at a yearly rate of ga which is lower than that of B, gb. Q: Use the rules of the logs to find an expression in terms of Ya(0), Yb(0), ga, and gb for the period, t*, where the poor economy catches up with the rich economy, i.e. when GDP per capita in both economies coincide. Show your derivations.<
- Consider a Solow-Swan economy with a Cobb-Douglas production function with a constant savings rate. Imagine that the population growth rate "n" is a decreasing function of capital and it has the following functional form: for low values of k it's constant at some high level. For intermediate levels of k, it decreases rapidly. And for high values of k the population growth rate is constant again. In other words, the population growth rate looks like : a. Why may the population growth rate look like this? (make sure you discuss its three components and how each of them may be a function of k in the real world) b. Does a steady state necessarily exist? Will the steady state be necessarily unique? Will the steady state(s) be stable? Will there be a "poverty trap"? (define poverty trap) How can this model be used (and how has this model been used) to justify large increases in foreign development aid? Discuss THREE potential flaws of the "population poverty trap" model. C. d. е. f. g.What is the difference between extensive and intensive growth? Why was the Soviet Union successful in terms of extensive growth under Stalin, but failed to succeed in terms of intensive growth during the reform periods under Khrushchev and Gorbachev?please answer the following, I have attached an image of the question for better format. Thanks! 3. Suppose that the production function of a country is given by Y=KaL1-a, where 0<a<1, Y is output, L is labour, and K is capital, Derive the equation for steady state capital per worker, output per worker, and consumption per worker in terms of the saving rate (s) and depreciation rate (d).