Exercise 3: Population growth and technological progress Consider a version of Solow's Model: Y₁ = AK L¹-a sYt = Kt+1 - Kt +6Kt Lt = Lo(1 + n)t 1 a) Rewrite the production function and the equation of capital accummulation using variables normalized by the units of labor, i.e. k = K/L; y = Y/L b) What are the values of k and y in a steady state? What are the growth rates of aggregate output and aggregate consumption? Consider this different version of Solow's Model: Y₁ = AK₂ª (E₂L₁) ¹- 1-a sYt Kt+1 - Kt +6Kt Lt = Lo(1 + n)t Et = Eo(1+x)t Rewrite the production function and the equation of capital accummulation using variables normalized by the units of effective labor, i.e. k = K/(EL); y = Y/(EL) . d) What are the values of k and y along a balanced growth path? What is the growth rate of aggregate output and aggregate consumption along this BGP?

Exercise 3: Population growth and technological progress Consider a version of Solow's Model: Y₁ = AK L¹-a sYt = Kt+1 - Kt +6Kt Lt = Lo(1 + n)t 1 a) Rewrite the production function and the equation of capital accummulation using variables normalized by the units of labor, i.e. k = K/L; y = Y/L b) What are the values of k and y in a steady state? What are the growth rates of aggregate output and aggregate consumption? Consider this different version of Solow's Model: Y₁ = AK₂ª (E₂L₁) ¹- 1-a sYt Kt+1 - Kt +6Kt Lt = Lo(1 + n)t Et = Eo(1+x)t Rewrite the production function and the equation of capital accummulation using variables normalized by the units of effective labor, i.e. k = K/(EL); y = Y/(EL) . d) What are the values of k and y along a balanced growth path? What is the growth rate of aggregate output and aggregate consumption along this BGP?

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Chapter1: Making Economics Decisions

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Exercise 3: Population growth and technological progress
Consider a version of Solow's Model:
Y₁ = AKL₁¹-a
sYt = Kt+1 — Kt +6Kt
Lt = Lo(1 + n)t
1
a) Rewrite the production function and the equation of capital accummulation using
variables normalized by the units of labor, i.e. k = K/L; y = Y/L
b) What are the values of k and y in a steady state? What are the growth rates of
aggregate output and aggregate consumption?
Consider this different version of Solow's Model:
1-a
Y₁ = AKtº (E₁L₁) ¹-ª
sYt Kt+1 - Kt + 8Kt
Lt = Lo(1 + n)t
Et = Eo(1+x)t
c) Rewrite the production function and the equation of capital accummulation using
variables normalized by the units of effective labor, i.e. k = K/(EL); y = Y/(EL).
d) What are the values of k and y along a balanced growth path? What is the growth
rate of aggregate output and aggregate consumption along this BGP?

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