Romer Model Exercise:Consider the Romer model, Y = A,Nyt, AAt+1Ão = 10,1 = 0.01, z = 0.035, Ñ = 100.ZAĄNat, and parameter values are:(a) What is the growth rate of GDP per capita? What is the per capita GDP at period60, Yt=60?(b) Suppose at period 60, the number of researchers decrease by 50% permanently. Drawa graph to show the impact. What is the value of per capita GDP, y4=60, now?(c) Suppose now the production function is still Y; = A¿Nyt, but the accumulation ofideas becomes AAt+1 = ZA?$ Nat. What is the growth rate of ideas?(d) Following from (c), what is the growth rate of output per capita at period 1?

The Romer version, developed by economist Paul Romer, is a neoclassical boom model that specializes…

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Lomer model

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Question

Romer Model Exercise:
Consider the Romer model, Y = A,Nyt, AAt+1
Ão = 10,1 = 0.01, z = 0.035, Ñ = 100.
ZAĄNat, and parameter values are:
(a) What is the growth rate of GDP per capita? What is the per capita GDP at period
60, Yt=60?
(b) Suppose at period 60, the number of researchers decrease by 50% permanently. Draw
a graph to show the impact. What is the value of per capita GDP, y4=60, now?
(c) Suppose now the production function is still Y; = A¿Nyt, but the accumulation of
ideas becomes AAt+1 = ZA?$ Nat. What is the growth rate of ideas?
(d) Following from (c), what is the growth rate of output per capita at period 1?

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Step 2: Explain the Growth rate of GDP per capita:

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Step 3: Explain the value of per capita GDP, Y-60, now

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Step 4: Explain the growth rate of ideas

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Step 5: Explain the Growth rate of output per capita at period 1:

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