Explain, using the OLG model, how an increase in the growth rate of technology affects welfare - specifically, argue how the intertemporal discount rate may change in response to an increase in technological growth and . Be thorough.

Explain, using the OLG model, how an increase in the growth rate of technology affects welfare - specifically, argue how the intertemporal discount rate may change in response to an increase in technological growth and . Be thorough.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 9SCQ: Would the following events usually lead to capital deepening? Why or why not? A weak economy in...

See similar textbooks

Related questions

Q: Explain any two features of classical theory of economic development

A: Classical growth theory is a modern economic theory that refers to the work of various economists…

Q: Suppose that all social programs simultaneously become more generous. In particular, suppose that…

A: A rise in social programs will surely improve people's well-being at the expense of the country's…

Q: Define growth accounting. How Neoclassical growth model is different from endogenous growth model?…

A: Neoclassical economics is a wide theory that emphasises supply and demand as the primary drivers of…

Q: Discuss the assumptions underlying Classical growth theory. Explain the process of emergence of…

A: Growth theory: This theory comes into existence when there is industrial revolution. With the help…

Q: The major hypothesis of the structural change model is that development is an identifiable process…

A: The structural change theory examines how undeveloped economies shift from a significant reliance on…

Q: What is neoclassical growth model of economic growth?

A: The Neoclassical Growth model of economic growth presents that steady state growth is achieved when…

Q: Consider an competitive economy with interest rate r =MPK=0.05, capital depreciation rate o = 0.03,…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: What is the principle of transition dynamics? Why does the Solow model leadto this principle, and…

A: When the growth rate of the economy is proportionate to the gap or difference between the country's…

Q: Q3. The Lewis-Fei-Ranis model of economic development with unlimited supplies of labour is a…

A: The Lewis-Fei-Ranis economic development model considered an elaborative or an extended version of…

Q: What determines growth in (post-Kaleckian) models? What are the effects of inequalities in…

A: *Answer: Introduction Post-Keynesian models Post-Keynesian theory of demand discuss the principles…

Q: The Black Death, the catastrophic epidemic of plague that swept through Europe, led to a sharp drop…

A: The plague had such a significant impact on the relationship between European landowners and the…

Q: List the two most important factors influencing Long-run Economic Growth. According to Neoclassical…

A: The Neoclassical Growth Theory is an economic growth model that explains how three economic factors,…

Q: This model begins from the assumption that savings is a constant proportion of income. a.…

A: Development economics would result in the relationship between variables between savings,…

Q: We know from the lectures that technical progress (innovation, ideas, knowledge breakthroughs) can…

A: New technologies lie at the core of settling or speeding up the five megatrends. Advancement…

Q: 5. Briefly summarizing both linear stage models and structural transformation models. What can you…

A: The linear stage models are basically known as the traditional and oldest form of the development…

Q: growth theory, and how does it relate to neoclassical growth theory? A) Both (B) and (C) B)…

A: Answer in step 2

Q: A change in the total amount of labour in the Romer model causes.. O a level effect only on GDP per…

A: Gross domestic product (GDP) is the standard measure of the value added created through the…

Q: What is neoclassical growth model of economic growth?

A: Economic Growth When economic growth is defined as a rise in people's real income it indicates that…

Q: “The major hypothesis of the structural change model is that development is an identifiable process…

A: Development economics is a branch of economics that focuses on improvement of economic conditions in…

Q: Exercise 4: AK Model One of the first models of endogenous growth was the AK model, which proposes…

Q: er a two-sector model of growth, with two kinds of investment opportunities—one with a diminishing…

A: According to the endogenous growth theory, the rate of technological advancement is determined by an…

Q: The purpose is to know if you can define each concept through a clear and precise explanation.…

A: please find the answer below.

Q: Use the framework of the Solow model to answer this question. Let capital stock per worker k = 400…

A: Growth rate of Capital is given by the equation : gk=syk-(n+d), where, gk is the Growth Rate of…

Q: 2. If the manufacturing sector uses labor-saving technology, how does the Lewis model get affected?

A: According to the guidelines, we will answer the first question for you, for the other question to be…

Q: Economics Explain and illustrate (with a graph), the Lewis "Two Sector Model". and How does this…

A: In development economics, the dual-sector model is a model. After its creator, W. Arthur Lewis, it…

Q: Consider a neoclassical growth model (Y= Aka L1-a), where technology A = 30, capital K = 30 and…

A: Labor productivity = Total output / Total labor

Q: What determines growth in post-Kaleckian (post-Kaleckian) models? What are the effects of…

A: On the other hand, post-Keynesian financial affairs are a collection of financial expectations…

Q: 10. The Solow model tends to over-predict income per person in poor countries. *

A: Introduction Solow model focus on long run growth. The main component of the model are saving and…

Q: (b) Use a model of endogenous growth to explain how encouraging more private investment in education…

A: Endogenous growth theory is referred to the economic theory that can argue that there is a…

Q: What is the AK model of Endogenous growth?

A: Endogenous growth theory According to endogenous growth theory, economic development is…

Q: Determine whether each scenario is an example of intertemporal substitution and label each…

A: Intertemporal Substitution:Intertemporal substitution is the determination to sacrifice prevailing…

Q: The models that emphasize the accumulation of capital and include Rostow’s stages of growth model…

A: Both the Harrod-Domar development model and the Structural Change Model have substantial stress on…

Q: o

A: Start by setting up the model. The production function is given by Y=AXαL1-α; X=DβK1-β We are told…

Q: How can economic growth be stimulated according to the Neoclassical view? By government intervention…

A: When talking about different views related to economics, neoclassical economics is one of those…

Q: Consider now the two-period model in general equilibrium, so that prices, investment and labour…

A: TFP (Total Factor Production): The ratio of aggregate output (e.g., GDP) to aggregate inputs is…

Q: what are the most likely reasons why standard economic models predicted only small effects of TCJA…

A: Lower business and corporate tax rates, new domestic investment incentives, and safeguards against…

Q: how business cycle models and growth models are connected at the frontierof macroeconomics.

A: Business cycle models are used to interpret a nation's GDP growth rate over time. It illustrates…

Q: For IS-PC-MR, three equation model, what are the the most crucial economic indicators of interested…

A: Three equation model IS - PC - MR consists of three important equations; IS it tell us equilibrium…

Q: So what was the economic growth neoclassical growth model

A: While economic expansion is characterized as an increase in people's real income, it means that the…

Q: Draw a diagram that describes the evolution of kt, and show that there exists a unique steady state,…

A: Given , Production function : F = Ka(bN)1-a Growth rate of Labor augmented technology = f No…

Q: Based on the Neoclassical growth model, which of the following explains improvements in material…

A: The Neoclassical growth model states that the equilibrium point in the short-run is the varying…

Q: One view of the consumption function is that workers have high propensities to consume and…

A: According to the Solow model the economy is said to be operating at its steady state level when the…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

This model states that output depends on the economy’s initial endowment of capital and labor. Y = f (K,L)a. Harrod-Domar Modelb. Rostow’s Stages of Growth Modelc. Solow Modeld. Power-Balance Model
Consider a two-sector model of growth, with two kinds of investment opportunities—one with a diminishing marginal product and one with a constant marginal product. a. What does the production function for this problem look like? b. Characterize the set of equilibria for this model. Does output in any of the equilibria have nonzero per capita growth? c. What can this model help us explain that strict endogenous and neoclassical growth models cannot?
Q3. The Lewis-Fei-Ranis model of economic development with unlimited suppliesof labour is a neoclassical model that was used to explain the development processin the LDCs. Discuss its limitations and how relevant it is in explaining their dualstructures.
Based on the Neoclassical Growth Model explain in detail what are the critical determinants of economic growth. Also, specify related assumptions.
how business cycle models and growth models are connected at the frontierof macroeconomics.
One view of the consumption function is that workers have high propensities to consume and capitalists have low propensities to consume. To explore the implications of this view, suppose an economy consumes all wage income and saves all capital income. Show that if factors of production earn their marginal product, this economy reaches the Golden rule level of capital. Using Solow growth model, explain. please explain it without plagiarism
what are the most likely reasons why standard economic models predicted only small effects of TCJA on GDP and average wage growth? Explain.
What should we infer when our models make predictions that are not reflected in the world? Obviously there is a level of inaccuracy in every model, but is it better to presume we misunderstand the world or to use such errors to find problems preventing the world from matching our model? Explain your answer. Robert Lucas argues that the main model of efficient investment is remarkably inaccurate. What is the key critique of Lucas and how was this problem addressed in our model? Many developing countries struggle with debt due to high interest rates and often low returns. Given what you learned in this chapter, why does this challenge exist? What might be a policy to alleviate it?
Consider the basic neoclassical growth model with technological change and CRRA preferences (8.49). Explain why θ > 1 ensures that the transversality condition is always satisfied.
What is linear stages of growth model in ecomonics? Explain by your own understanding.
3 Assume a closed economy, perfectly elastic labor supply, and linear technology. Suppose the incremental capital-output ratio (ICOR) is 3, the depreciation rate is 3%, and the gross savings rate is 10%. Use the Harrod-Domar growth equation to determine the rate of growth. What would the gross savings rate have to be to achieve 5% growth? Assuming a perfectly elastic labour supply, state one criticism of this model from an exogenous growth theory viewpoint and another criticism of this model from an endogenous growth theory viewpoint.
Based from the material provided, give the point of view of the following classical economists on economic development. Explain the pros and cons. Economist Focus and viewpointAdam SmithDavid RicardoJohn Stuart MillThomas MalthusMarx and EngelsJosephSchumpeter Reflection:Do you think the concepts and views of the economists are true and relevant for economicdevelopment? (cite the theories/ views of the economist/s that are relevant)