lowest income countries, higher population growth rates will occur for the next few decades. Use the Solow model to predict the effect of these higher population growth rates on the: a. growth of total output in the steady state of these countries b. growth of output per worker in the steady state of these countries

lowest income countries, higher population growth rates will occur for the next few decades. Use the Solow model to predict the effect of these higher population growth rates on the: a. growth of total output in the steady state of these countries b. growth of output per worker in the steady state of these countries

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

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Many demographers predict that the UnitedStates will have zero population growth in thetwenty-first century, in contrast to average popu-lation growth of about 1 percent per year in thetwentieth century. Use the Solow model to fore-cast the effect of this slowdown in populationgrowth on the growth of total output and the growth of output per person. Consider theeffects both in the steady state and in the transi-tion between steady states.
In the Solow growth model, what two things (lines/equations) are equalin steady state? Explain all of the variables and the logic of why this is asteady state
Consider the Solow Model with no population or technological growth. Suppose that two countriesare identical except that in Country A the depreciation rate is greater than the depreciation rate inCountry B.a. How do you compare the steady state level of capital per worker in these countries? Illustrategraphically. Explain the economic intuition for the di erences in capital per worker in steadystate.b. Which country a higher output per worker in steady state? What about investment per workerin steady state? Explain carefully.
(a) Two countries, Country A and Country B, are described by the Solow growth model. Bothcountries are identical, except that the rate of labor-augmenting technological progress ishigher in A than in B.i. In which country is the steady-state growth rate of output per effective worker higher?ii. Does the Solow growth model predict that the two economies will converge to the samesteady state? (b) Based on the Solow growth model with population growth and labor-augmenting technologicalprogress, explain how each of the following policies would affect the steady-state level andsteady-state growth rate of total output per person:i. an increase in the government’s budget deficit ii. grants to support research and development (c) Consider a Solow model where the production function no longer exhibits diminishing returnsto capital accumulation. Assume the production function is now Y = AK. What happens tothe growth rate of per capita GDP over time?
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?
In the Solow model calculate the capita per output at the steady state level and show it on the diagram investment=9,5% population= 1,3% cobb douglas a=0.6
E3 According to the Solow model, what can be said about convergence of production per capita between differentcountries? With the help of a diagram, explain if the production per capita of a country could still grow onceits steady state has been reached.
Explain the key trends in the evolution of cross-country income differencessince the 1820s. Use a graph of the Solow model and an associated graph ofoutput per worker over time to help explain whether capital accumulation or thegrowth rate of technology is the most likely explanation for the “hockey stick”pattern observed in the data for global income since 1820. Critically discussthe main strengths and limitations of the traditional Solow growth model
In the Solow economic model, id like to know the relationship between the rate of population growth and the steady state level of income. I know that when the rate of population growth grow, then the breakeven investment line goes up, which decreses investment and capital per worker, but what does it do to the income level and the steady state rate of growth?
Consider the Solow growth model with concave production function as studied in class. Supposethe economy is initially in the picture below, and currently has the level of capital stock of K0. What wouldhappen to the dynamics of capital accumulations when depreciation rate increases? Graphically denote thedirection and the speed of change/accumulation/decumulation of the capital stock, then verbally explain whythey move like so.
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
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?