Question

In a solow-type economy with Cobb-Douglas production, assume that the population growth rate depends on the...

In a solow-type economy with Cobb-Douglas production, assume that the population growth rate depends on the current level of output per worker, y, so that n=my, where m is a positive constant. For simplicity, assume d=0
a) Find an expression for the growth rate of the capital-labor ratio, k̇ / k
b) Find expressions for the steady states of y and k
c) Find an expression for the growth rate of Y in steady state

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
An economy has a Cobb–Douglas production function: Y=Kα(LE)1−αY=Kα(LE)1−α The economy has a capital share of 0.30,...
An economy has a Cobb–Douglas production function: Y=Kα(LE)1−αY=Kα(LE)1−α The economy has a capital share of 0.30, a saving rate of 42 percent, a depreciation rate of 5.00 percent, a rate of population growth of 2.50 percent, and a rate of labor-augmenting technological change of 4.0 percent. It is in steady state. Solve for capital per effective worker (k∗)(k∗), output per effective worker (y∗)(y∗), and the marginal product of capital. k∗=k∗= y∗=y∗= marginal product of capital =
QUESTION 1 Suppose an economy can be characterized by a Cobb-Douglas production function with capital share...
QUESTION 1 Suppose an economy can be characterized by a Cobb-Douglas production function with capital share of 1/3, and A = 200. The investment rate is 0.12 (12%), the annual rate of growth of the labor force is 0.02 (2%), and the annual depreciation rate of capital is 0.04 (4%). According to the Solow growth model, this economy's steady state capital/labor ratio (capital per worker, k) is 4,000 8,000 10,000 12,000 None of the above. QUESTION 2 The steady state...
Assume that an economy is described by the Solow growth model as below: Production Function: y=50K^0.4...
Assume that an economy is described by the Solow growth model as below: Production Function: y=50K^0.4 (LE)^0.6 Depreciation rate: S Population growth rate: n Technological growth rate:g Savings rate: s a. What is the per effective worker production function? b. Show that the per effective worker production function derived in part a above exhibits diminishing marginal returns in capital per effective worker C.Solve for the steady state output per effective worker as a function of s,n,g, and S d. A...
An economy has the following Cobb-Douglas production function: Y = Ka(LE)1-a The economy has a capital...
An economy has the following Cobb-Douglas production function: Y = Ka(LE)1-a The economy has a capital share of 1/3, a saving rate of 24 percent, a depreciation rate of 3 percent, a rate of population growth of 2 percent, and a rate of labor-augmenting technological change of 1 percent. It is in steady state. a. Does the economy have more or less capital than at the Golden Rule steady state? How do you know? To achieve the Golden Rule steady...
Assuming the following Cobb-Douglas production function is given for a closed economy without government. i. Where...
Assuming the following Cobb-Douglas production function is given for a closed economy without government. i. Where returns to capital = 0.5; and rate of depreciation of physical capital Determine the steady-state level of capital per worker. What is the savings rate at which the steady-state level of capital is achieved?             [6marks] ii Prove that the steady-state level of output is the ratio of the saving rate to the rate of depreciation                                                                       [6 marks] iii. Assuming that , what will be...
Solow Growth Model Question: Consider an economy where output (Y) is produced according to function Y=F(K,L)....
Solow Growth Model Question: Consider an economy where output (Y) is produced according to function Y=F(K,L). L is number of workers and Y is the capital stock. Production function F(K,L) has constant returns to scale and diminishing marginal returns to capital and labor individually. Economy works under assumption that technology is constant over time. The economy is in the steady-state capital per worker. Draw graph. Next scenario is that the rate of depreciation of capital increases due to climate change...
Assume that an economy described by the Solow model has the production function Y = K...
Assume that an economy described by the Solow model has the production function Y = K 0.4 ( L E ) 0.6, where all the variables are defined as in class. The saving rate is 30%, the capital depreciation rate is 3%, the population growth rate is 2%, and the rate of change in labor effectiveness (E) is 1%. For this country, what is f(k)? How did you define lower case k? Write down the equation of motion for k....
17. Solow growth The production function in your country is: Y = K^0.5(LE)^0.5. Your economy saves...
17. Solow growth The production function in your country is: Y = K^0.5(LE)^0.5. Your economy saves 24% of output each period, and 5% of the capital stock depreciates each period. The population grows 2% annually. Technology grows 1% annually. You begin with 1000 workers and 1 unit of capital, and a tech- nology level equal to 1. a) Write the production function in per-eective-worker terms, so that per-effective-worker output (y = Y/LE ) is a function of per-effective-worker capital (k=...
Question #1: The Basic Solow Model Consider an economy in which the population grows at the...
Question #1: The Basic Solow Model Consider an economy in which the population grows at the rate of 1% per year. The per worker production function is y = k6, where y is output per worker and k is capital per worker. The depreciation rate of capital is 14% per year. Assume that households consume 90% of their income and save the remaining 10% of their income. (a) Calculate the following steady-state values of (i) capital per worker (ii) output...
Both population and the workforce grow at the rate of n = 1% per year in...
Both population and the workforce grow at the rate of n = 1% per year in a closed economy. Consumption is C = 0.5(1 -t)Y, where t is the tax rate on income and Y is total output. The per-worker production function is y = 8k1/2, where y is output per worker and k is the capital-labor ratio. The depreciation rate of capital is d = 9% per year. Suppose for now that there are no government purchases and the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT