Production function is given by Y = K (AN)-a, where a=2/3. Initially, the saving rate was equal to s an %3D economy was in the steady state. Use the Solow growth model to answer the following questions. (Please fill in numbers; use a yomma as a decimal separator: 10,5) 1. In order to increase capital per unit of effective labor in the steady state by a factor of 27 (i.e. to make it larger), the rate of saving needs to increase by a factor of 2. In order to increase output per unit of effective labor in the steady state by a factor of 4 (i.e. to make it - larger), the rate of saving needs to increase by a factor of 3. Suppose that s=25 percent, the rate of depreciation of capital is equal to 5 percent, the rate of technola progress is equal to 1 percent, and the rate of population growth is equal to 0,25 percent, a=2/3. The st tmont per unit of effective labor is equal to

Production function is given by Y = K (AN)-a, where a=2/3. Initially, the saving rate was equal to s an %3D economy was in the steady state. Use the Solow growth model to answer the following questions. (Please fill in numbers; use a yomma as a decimal separator: 10,5) 1. In order to increase capital per unit of effective labor in the steady state by a factor of 27 (i.e. to make it larger), the rate of saving needs to increase by a factor of 2. In order to increase output per unit of effective labor in the steady state by a factor of 4 (i.e. to make it - larger), the rate of saving needs to increase by a factor of 3. Suppose that s=25 percent, the rate of depreciation of capital is equal to 5 percent, the rate of technola progress is equal to 1 percent, and the rate of population growth is equal to 0,25 percent, a=2/3. The st tmont per unit of effective labor is equal to

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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9. Consider a numerical example using the Solow growth model. Suppose that F(K, N) KO.5N0.5, with d = z = 1, and take a period to be a year. (a) Determine capital per worker, income per capita, and consumption per capita in the steady state. 0.1, s = 0.2, n = 0.01, and
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Q1 The steady state Consider the Basic Solow Model without exogenous growth: Y-AKOL-a C= (1-8)Y Y=C+I K' I (1-8)K where labor is constant. Assume the following values for the rest of this question: A=100 a = 0.35 s=0.12 8=0.10 L=25 For each question that follows, if the answer depends on the answer(s) to previous question(s), use unrounded answers in do calculations. If you do not, rounding error will accumulate. Q1.1 Compute steady state capital per worker. Round your answer to at least three decimal places.
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