3) The purpose of exogenous/endogenous growth theory is to explain technological progress. Some of these models do so by questioning the Solow model's assumption of increasing/diminishing/constant returns to capital.
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- 7. Explain how the Solow growth model differs from models of endogenous growth with respect to the sources of technological progress. Give at least one policy implication of the Endogenous growth models.In the Solow growth model:1. What is the equilibrium effect of an increase in the population growth rate?2. What is the equilibrium effect of an increase in TFP?3. Which of these shocks is better able to generate sustained growth: a decrease in thepopulation growth rate, or an increase in TFP? How does this compare with theresults of the Malthusian model of economic growth?4.The Solow growth model differs from the Harrod-Domar because: a.Assumes that depreciation rate and population growth are exogenous b.Assumes that the rate of technological progress varies from country to country. c.Predicts that permanent growth is achievable only through technological progress d.Predicts that poorer countries will grow faster than richer countries.
- use only equitions and graphs to show correct statement a.The assumption of Constant Returns to Scale technology implies that the marginal product of factor imput is always decreasing. b. In the Solow growth model i the saving rate is a crucial determinant of the economy's long-run growth rate of output per worker. c. In the endogenous growth model , the representative firm sets the wage so that the demand and supply of efficiency units of labour are equal. d. In the endogenous growth model , there is no steady state of the economy as human capital will always continue to grow forever(III) Consider a version of the Solow growth model without technological change covered in lecture with a rate of population growth of zero (i.e. n=0). Assume that the country has been at the BGP for many years and that suddenly at time t ̅ there is a onetime increase in its population. Show how the economy will adjust to a new BGP by working with the modified system (per capita/worker variables). Show how capital per worker adjusts to the new Steady State level and how its growth rate changes over time.1. Define Capital Accumulation Equation under the Solow Growth Model
- Consider the Solow growth model in which we allow for long-run techno- logical progress. Assume N′ = (1 + n)N where N is the population (labor force) in the current period, N′ is the population (labor force) in the future period, and n is the pop- ulation growth rate. Assume that z = 1 for simplicity, and there is labour-augmenting technological progress. The production technology is given by Y = F(k,bN) where Y is the output of the consumption good, K is the current period capital stock, b denotes the number of units of “human capital” per worker, and bN is the “efficiency units” of labour. Assume that b′ = (1 + β)b where β > 0 is the growth rate in human capital. Consumers save a constant fraction, s, of their disposable income, where 0 < s < 1. The production function F exhibits constant returns to scale. (a) Define a variable k as the quantity of capital per efficieny units of labor (as opposed to quantity of capital per labour). Using equilibrium conditions derive the…4 Explain the central paradox at the heart of the Solow model, with constant and exogenous technologies. Given this paradox, why is the Solow model still relevant?The Solow Growth Model is a model that is often used to explain the theoretical relationship between several factors that determine a country's economic growthcountry.(a) Explain what you know about the Solow Growth Model and what are the most important determinants of a country's long-term growth rate?(b) Within the framework of the Solow Growth Model, how does population growth affect a country's economic growth rate?(c) Still within the framework of the Solow Growth Model, how does technological progress affect a country's growth rate?
- which statement \s are true. use graphs to exlain a. In the Solow growth model, the saving rate is a crucial determinant of the economy's long-run growth rate of output per worker. b. In the endogenous growth model , the representative firm sets the wage so that the demand and supply of efficiency units of labour are equal. c. In the endogenous growth model , there is no steady state of the economy as human capital will always continue to grow forever. d. The assumption of Constant Returns to Scale technology implies that the marginal product of factor imput is always decreasing.a) What do steady state and conditional convergence mean? b) Why do these happen according to the Solow Growth Model? c) How can a country that is already at a steady state continue to grow?In the Solow growth model:1. Write the expression for consumption per capita in the steady-state equilibrium, asa function of capital per capita.2. What is the golden rule quantity of capital per capita ? Specifically, tell me thedefinition of this concept, and then relate it to the equation for the equilibriumconsumption per capita whose expression answers question (1) above.23. How do we find the golden rule savings rate, once we know the golden rule quantityof capital per capita?