Macroeconomics (9th Edition)
9th Edition
ISBN: 9780134167398
Author: Andrew B. Abel, Ben Bernanke, Dean Croushore
Publisher: PEARSON
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Chapter 10, Problem 5NP
a
To determine
To ascertain: Values of Solow residual for 2012 and 2013 year.
b)
To determine
To ascertain: Relation between growth in Solow residual and productivity between 2012 and 2013 when labor and capital utilization remains constant.
c)
To determine
To ascertain: Relation between growth in Solow residual and productivity between 2012 and 2013 when labor utilization increases by 3%.
d)
To determine
To ascertain: Relation between growth in solow residual and productivity between 2012 and 2013 when labor and capital utilization increases by 3%
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Consider a numerical example of the Solow model:
Assume that
n=0.2
s=0.3
d=0.1
F(K,N)=K12N12
Initially, in period t=0, that
z=3
N=1
and the economy is in a steady state:
Suppose that at t=1, total factor productivity falls to z=1
and then returns to
z=3 for periods t=2,3,4....
What is the value of per person aggregate output at period t=1?
In this question, you will explore how changes in the saving rate and the rate of technological progress affect an economy’s growth. In addition, you will examine how the golden rule saving rate depends on the production function. Consider the Solow (neoclassical) growth model with aggregate production function Y = K^alpha(AN)^(1-alpha). Each period lasts a year.
Draw a graph with the following elements:
A Solow growth (Y) function where Y= square root of K
An investment (I) function where I = % * Y
A depreciation (D) function where D = % * K
Chapter 10 Solutions
Macroeconomics (9th Edition)
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