The Solow model is an important formal model of economic growth. Assume that the productionfunction is Y = F(K,N) = zK° N¹-a, where 0 < a < 1. Production is constant returns toscale. We use lowercase to denote variables in per capita terms. Find the steady-state value for consumption per capita, c*.○ c* = (1 − s) (³d) 1º an² - a-n+d8221-aC* (1 − s)²(‚²²)n+dOc* =1ºO c* = (1 − s) z¹¹² (d)n+d○ c* = (1 − s)(„³²¿) 1º a-n+d

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the Solow model. Using suitable diagrams, compare the different dynamics for the levels and growth rates of capital per capita and output per capita following: (a) a new wave of immigration, (b) an increase in the saving rate, (c) a one-shot foreign investment which increase the size of the available stock of capital, (d) an important technological advance.
an economy is described by the Solow-Swan model with the following variables, E(t)=1 The saving rate is 0.41 per year. Labor's share of income is 0.44. The growth rate of labor efficiency is 0.03 per year. The growth rate of the labor force is 0.02 per year Depreciation is 0.09 per year. calculate the steady-state value of the capital-to-labor ratio, K/L Enter your answer to two places after the decimal.
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
a. Show graphically what happens in the Solow Model when population growth increases. Label your graph clearly. b. Explain clearly the impact of this increase in population growth on i. income per capita ii. the growth rate of income per capita (in transition and at the new steady state) iii. the growth rate of total GNP.
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.
Please help me answer 20-25
Given the following aggregate production function: Y = K0.25 (AL) 0.75, where technology A grows at a fixed rate: A=g>0 (f) Find the steady state solution algebraically for output per efficiency worker, ỹ, where (i = 1,2). Show all workings. (g) Outline and explain the behaviour of per worker variables along the model's balanced growth path.
Consider the Solow-Swan model of growth. Imagine that the production function is Y = AKªL²-a 1. Use the production function to compute output per capita, y = Y /L, as a function of capital per person, k = K/L. 2. Derive the fundamental equation of the Solow-Swan model. Please show all the steps. Furthermore, imagine that the savings, depreciation, and population growth rates take the values s = 0.3, 8= 0.1 and n =0.01. You do not know the value of A. 3. Use the fundamental equation of the Solow-Swan model to compute the growth rate of capital per person as a function of k. 4. In the steady-state, the growth rate of capital is zero. Using the parameters assumed above, find the steady-state level of the capital stock, k_. 5. Calculate GDP per capita at the steady state. 6. Imagine that this country is in its steady state so its capital stock is k_. Imagine that the country receives a gift of one unit of capital from the world bank (so, suddenly, the capital stock is k_+1). Can you say…
Suppose in a Solow model, we have the following parameter values: n = 0, s = 0.2, a = 0.33. There is no growth in the total factor productivity so that A, = A = 1. Moreover, we know that at time 0, the economy is at a steady state so that k = k, =1. Now imagine that a deadly pandemic hits the economy at time t=1. As a result, the population at time t =1 is 10% lower than the population at time t=0. The pandemic is a one-time shock so that population growth rate remains the same, i.e., from t-2 onward, the population remains the same as the population at time t=1. The total capital stock, however, is unchanged so that K, Ko. What is the growth rate of per-capita capital in percentage (rounded to the 2 decimal places, e.g., answer 1.08 if your calculation shows the growth rate is 0.01079) at time t=3 from time t=2? %3!

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