An economy has the per-worker production function y = Ak where y is output per worker and k is capital per worker; A = 8 and a = 0.4. Capital accumulation follows: k = sy- (n+8)k The saving rates is 0.12, the depreciation rate & is 0.05, and the population growth raten is 0.02. a. What are the steady state values of capital per worker, output per worker, and consumption per worker? b. Repeat Part (a) for a saving rate of 0.2 instead of 0.12. c. Repeat Part (a) for a population growth rate of 0.01 (with a saving rate of 0.12). d. Repeat Part (a) for a production function of y = 15k04 (with a saving rate of 0.12 and population growth rate of 0.02) e. Suppose the economy is not in the steady state currently. Write down the growth rate of capital per worker (4) along the transition path in terms of A, k, a, s, n and 8. Then draw as a function of k. Label the steady state capital-labour ratio as k*. (Hint: use the horizontal axis to represent and the vertical axis to represent.) f. Show your answer to the following questions on the function diagram from part (e). What happens to when there is an increase in s? What happens to when there is an increase in n? Explain your intuition of the results.
An economy has the per-worker production function y = Ak where y is output per worker and k is capital per worker; A = 8 and a = 0.4. Capital accumulation follows: k = sy- (n+8)k The saving rates is 0.12, the depreciation rate & is 0.05, and the population growth raten is 0.02. a. What are the steady state values of capital per worker, output per worker, and consumption per worker? b. Repeat Part (a) for a saving rate of 0.2 instead of 0.12. c. Repeat Part (a) for a population growth rate of 0.01 (with a saving rate of 0.12). d. Repeat Part (a) for a production function of y = 15k04 (with a saving rate of 0.12 and population growth rate of 0.02) e. Suppose the economy is not in the steady state currently. Write down the growth rate of capital per worker (4) along the transition path in terms of A, k, a, s, n and 8. Then draw as a function of k. Label the steady state capital-labour ratio as k*. (Hint: use the horizontal axis to represent and the vertical axis to represent.) f. Show your answer to the following questions on the function diagram from part (e). What happens to when there is an increase in s? What happens to when there is an increase in n? Explain your intuition of the results.
Chapter20: Economic Growth In The Global Economy
Section: Chapter Questions
Problem 1P
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just e and f please
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