In Solow model, we assumed that population growth rate is irrelevant to saving rate and technological progress. In this question, we will relax this assumption. Assume that population growth would reduce technological progress, what would happen to the steady state level of capital per capita? What if otherwise population growth increases technological progress? Explain mathematically and graphically.

In Solow model, we assumed that population growth rate is irrelevant to saving rate and technological progress. In this question, we will relax this assumption. Assume that population growth would reduce technological progress, what would happen to the steady state level of capital per capita? What if otherwise population growth increases technological progress? Explain mathematically and graphically.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 4P

See similar textbooks

Similar questions

“The Solow model shows that the higher the rate of population growth, the higher the steady-state levels of capital per worker and output per worker because more population meansmore worker so more output”. Do you agree with the statement?Graphically explain,
This question is about the Solow model. For 2 countries, 1 and 2 which has the same rate of population growth and depreciation and the same saving rate, and are in initial steady state, their capital have equal importance for production for both countries with the same value of α = 1/2 a. In the initial steady state, country 1 has 2 times the output per capita to country 2 because of its greater productivity A. Please use the steady-state equation to find the ratio of the 2 countries’ ratio of productivity and explain it. b. Find the 2 countries’ ratio of capital per capita and explain it. c. Please explain in detail if the capital owners in country 1 are motivated to move their capital from country 1 which is capital abundant, to country 2 which is more capital scarce? Hint: the 2 countries’ payment per unit of capital d. Does workers in country 2 motivated to immigrate to country 1? Please explain from the perspective of the 2 countries’ wages.
Assume that an economy is described by the Solow model in the long run. The rate of population growth in this economy is n technological growth is g rates of total GDP, GDP per worker, and GDP per effective worker? 0.01 and the rate of 0.02. What are the long-run (steady state) growth rates of total GDP, GDP per worker, and GDP per effective worker?
Consider a numerical example using the Solow Growth Model, for 2 countries.Country A: d=0.1, s=0.3, n=0.01, z=1, F(K,L)=K0.3N0.7 Country B: d=0.1, s=0.2, n=0.01, z=1.5, F(K,L)=K0.4N0.6Which Country has a higher level of GDP per capita in steady state? Country A Country B Not enough information
This question refers to the Solow–Swan model with constant technology. Imagine the model is in steady state and the population growth rate rises. As a result the steady-state level of real GDP per capita will: a. fall b. rise c. stay the same d. can’t say because we need to know what will happen to the steady-state level of capital per person and, in the absence of that information, we can’t answer the question
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?
In the Solow–Swan model, a decrease in the rate of population growth will have what effect on the steady-state level of real GDP per capita? a. Increase b. No change in real GDP per capita because although it does change the rate at which output and population are growing, it will make both growth rates change by the same amount and so the output-population ratio will be unchanged c. Decrease d. No change in real GDP per capita because although it does change the level of labour, the level of capital will change to keep the capital-labour ratio the same as before
We presented two versions of the Solow growth model. (1) In the simple version, there is no technological progress. Show in this simple version that at the steady state output per worker (GDP per worker) depends positively on the saving rate, and negatively on the population growth rate. What’s the growth rate of GDP at the steady state? What’s the growth rate of GDP per worker at the steady state? (2) In the version of the model with technological progress, what’s the growth rate of GDP at the steady state? What’s the growth rate of capital per worker at the steady state? What’s the growth rate of GDP per worker at the steady state? Show your steps
According to the Solow–Swan model, if the saving rate rises, then: a. steady state per capita income falls b. per capita income falls c. steady state per capita income rises d. steady state per capita income is unaffected
The Solow Growth Model is an exogenous model of economic growth that analyzes changes in the level of output in an economy over time as a result of changes in the population growth rate, the savings rate, and the rate of technological progress. Consider the Solow model. a) Explain using a graph why there is a poverty trap in this model b)Describe how an economy such as one characterized by this model may break out of a poverty trap.
when a country adds capital what is it doing to its productivity and GDP? Which variable in the Solow Model equation is it changing?
Draw a well labeled graph that illustrates the steady state of the solow model with population growth. Use the graph to find what happens to steady state capital per worker and income per worker in response to each of the following exogenous changes D. A one time permanent improvement in technology increases the amount of output that can be produced from any given amount of capital and labor. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.