Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 5, Problem 11E
(a)
To determine
The projection of the relative per capita steady state
(b)
To determine
The projection of the relative per capita steady state GDP of countries.
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Students have asked these similar questions
Consider two countries in a Solow economy with growth in population but no growth in technological change. Assume both start from below their steady-state k∗, but one starts further below than the other, and all parameters are identical. On the same diagram, plot transition paths for each country.
1. In the Solow model, if investment (I=sY) is lower than depreciation (dK), then….
A. Depreciation (dK) in the following period will be higher than in the current period.
B. Capital stock (K) in the following period will be lower than in the current period.
C. Per-capita GDP (y) in the following period will be the same as in the current period.
D. Overall GDP (Y) in the following period will be higher than in the current period.
The answer is B - - Can you show work for it, graph the representation for it
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?
Chapter 5 Solutions
Macroeconomics (Fourth Edition)
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- Consider the Solow growth model in which population evolves according to: N′ = (1 + n)N where N is the population (labor force) in the current period, N′ is the population (labor force) in the future period, and n is the population growth rate. There are public health expenditures that takes the form of government spending, G = gN, where G is the current period government spending on health care, g is the per-capita health spending in the current period. The production technology is given by Y = zKαN1−α where Y is the output of the consumption good, z is the total factor productivity, K is the current period capital stock, aN is the labour input, and 0 < α < 1 is a parameter. Consumers save a constant fraction, s, of their disposable income, where 0 < s < 1. (a) Suppose that the economic is hit by a pandemic (e.g. Covid-19). The government responds to the pandemic by raising the public health spending per person (e.g spending on vaccination) temporarily (i.e. one-period…arrow_forwardConsider the Solow growth model in which population evolves according to: N′ = (1 + n)N where N is the population (labor force) in the current period, N′ is the population (labor force) in the future period, and n is the population growth rate. There are public health expenditures that takes the form of government spending, G = gN, where G is the current period government spending on health care, g is the per-capita health spending in the current period. The production technology is given by Y = zKαN1−α where Y is the output of the consumption good, z is the total factor productivity, K is the current period capital stock, aN is the labour input, and 0 < α < 1 is a parameter. Consumers save a constant fraction, s, of their disposable income, where 0 < s < 1. Suppose that the economic is hit by a pandemic (e.g. Covid-19) which causes a temporary decrease in total factor productivity, z, as certain sectors in the economy (e.g. entertainment, travel etc.) cannot deliver…arrow_forwardConsider the Solow growth model in which population evolves according to: N′ = (1 + n)N where N is the population (labor force) in the current period, N′ is the population (labor force) in the future period, and n is the population growth rate. There are public health expenditures that takes the form of government spending, G = gN, where G is the current period government spending on health care, g is the per-capita health spending in the current period. The production technology is given by Y = zKαN1−α where Y is the output of the consumption good, z is the total factor productivity, K is the current period capital stock, aN is the labour input, and 0 < α < 1 is a parameter. Consumers save a constant fraction, s, of their disposable income, where 0 < s < 1. (a) Suppose that the economic is hit by a pandemic (e.g. Covid-19). The government responds to the pandemic by raising the public health spending per person (e.g spending on vaccination) temporarily (i.e. one-period…arrow_forward
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