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Numerical simulation. Consider the following Solow growth model: Yt = 10 * /k, k++1 = kt – 0.1k; + 0.2y; - ko = 50 where, k,is capital per worker at time t, and y; is output per worker. a. What are the savings and depreciation rates? b. In a spreadsheet, calculate {yt, kt} for t=0,1,2, ...100. c. Present a scatter plot of {yt, k¿}, with k̟ on the x-axis.

Numerical simulation. Consider the following Solow growth model: Yt = 10 * /k, k++1 = kt – 0.1k; + 0.2y; - ko = 50 where, k,is capital per worker at time t, and y; is output per worker. a. What are the savings and depreciation rates? b. In a spreadsheet, calculate {yt, kt} for t=0,1,2, ...100. c. Present a scatter plot of {yt, k¿}, with k̟ on the x-axis.

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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3. Numerical simulation. Consider the following Solow growth model: /kt Yt = 10 * kt+1 = kt – 0.1k, + 0.2y; ko = 50 - where, k,is capital per worker at time t, and Y; is output per worker. What are the savings and depreciation rates? b. In a spreadsheet, calculate {y¢, kt} for t=0,1,2, ...100. c. Present a scatter plot of {yt, ke}, with kt on the x-axis. d. Present a time series graph of {yt, t} with t on the x-axis. What happens to the growth rate of y; over time? e. Do y and k approach a steady state over time? If so, what is this steady state?
Transcribed Image Text:3. Numerical simulation. Consider the following Solow growth model: /kt Yt = 10 * kt+1 = kt – 0.1k, + 0.2y; ko = 50 - where, k,is capital per worker at time t, and Y; is output per worker. What are the savings and depreciation rates? b. In a spreadsheet, calculate {y¢, kt} for t=0,1,2, ...100. c. Present a scatter plot of {yt, ke}, with kt on the x-axis. d. Present a time series graph of {yt, t} with t on the x-axis. What happens to the growth rate of y; over time? e. Do y and k approach a steady state over time? If so, what is this steady state?
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