Suppose there are 2 countries, A and B, which only differ in their capital depreciation rates A OB. The production function of both countries is y = AK0,2 a) Construct a ratio to compare the steady state production between the two countries. Consider n>0 b) Consider that $4 = 0,1; dß = 0,05; n₁ = ng = 0,05. Interpret the above ratio. c) Assume that country A is an economy with the following parameters: A = 2; n₁ = 0,05; Y₁ = 0,2; 8₁ = 0,1 Find the level of capital and product per worker in periods 2 and 3, considering that in period 1 the capital per worker is 2. Approximate to 2 decimal places. d) What would happen to the steady state levels of country A if it raises its saving rate to YA > YA? Interpret and plot

Suppose there are 2 countries, A and B, which only differ in their capital depreciation rates A OB. The production function of both countries is y = AK0,2 a) Construct a ratio to compare the steady state production between the two countries. Consider n>0 b) Consider that $4 = 0,1; dß = 0,05; n₁ = ng = 0,05. Interpret the above ratio. c) Assume that country A is an economy with the following parameters: A = 2; n₁ = 0,05; Y₁ = 0,2; 8₁ = 0,1 Find the level of capital and product per worker in periods 2 and 3, considering that in period 1 the capital per worker is 2. Approximate to 2 decimal places. d) What would happen to the steady state levels of country A if it raises its saving rate to YA > YA? Interpret and plot

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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