Consider a Solow-Swan economy with a Cobb-Douglas production function. Imagine that the savings rate "s" is an increasing function of capital and it has the following functional form: for low values of k the savings rate is constant at some low level. For intermediate levels of k, the savings rate increases rapidly. For high values of k the savings rate is constant again. In other words, the savings rate looks like: Does a steady state necessarily exist? b. Will the steady state be necessarily unique? Will the steady state(s) be stable? d. Will there be a "poverty trap"? (define poverty trap) How can this model be used (and how has this model been used) to justify large increases in foreign development aid? Discuss THREE potential flaws of the "savings poverty trap" model. a. C. е. f.

Consider a Solow-Swan economy with a Cobb-Douglas production function. Imagine that the savings rate "s" is an increasing function of capital and it has the following functional form: for low values of k the savings rate is constant at some low level. For intermediate levels of k, the savings rate increases rapidly. For high values of k the savings rate is constant again. In other words, the savings rate looks like: Does a steady state necessarily exist? b. Will the steady state be necessarily unique? Will the steady state(s) be stable? d. Will there be a "poverty trap"? (define poverty trap) How can this model be used (and how has this model been used) to justify large increases in foreign development aid? Discuss THREE potential flaws of the "savings poverty trap" model. a. C. е. f.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter17: Economic Growth: Resources, Technology, Ideas And Institutions

Section: Chapter Questions

Problem 3WNG

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