Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 6.A, Problem 4E
a)
To determine
Graph the behavior of output per person using the ratio scale.
b)
To determine
Explain the changes in the growth rate of output per person over time.
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Students have asked these similar questions
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
Suppose a Solow economy is initially at its steady state k∗, and suddenly is hit by a decrease in the depreciation rate δ, from δ to δ1. This change does not alter any of the other exogenous parameters in the model
Depict this situation in a graph
What happens to steady state level of capital per capita in this situation?
What happens to the level of capital per capita over time? Depict this in a graph and explain intuitively.
Consider the endogenous growth model AK, in which the production function is given by Y = AK. Suppose s denotes the saving rate; that δ represents the depreciation rate; and that the variable that represents the population and that grows at the rate n. Calculate the growth rate of capital per capita in the same way as for the Solow model and, from there, solve the differential equation to obtain the capital per capita (denoted by k) as a function of time.
Chapter 6 Solutions
Macroeconomics (Fourth Edition)
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- The amount of education the typical person receives varies substantially among countries. Suppose you were to compare a country with a highly educated labor force and a country with a less educated labor force.Assume that education affects only the level of the efficiency of labor. Also assume that the countries are otherwise the same: they have the same saving rate, the same depreciation rate, the same population growthrate, and the same rate of technological progress. Both countries are described by the Solow model and are in their steady states. What would you predict for the following variables? a)The real wage.arrow_forwardConsider the basic Solow model with no population growth and no technological progress and a production function of the form F (K, H ), where H denotes the efficiency units of labor (human capital) given by where N is the set of all individuals in the population, and hi is the human capital of individual i. Assume that H is fixed. Suppose there are no human capital externalities and factor markets are competitive. (a) Calculate the steady-state equilibrium of this economy. (b) Prove that if 10% higher h at the individual level is associated with a% higher earnings, then a 10% increase in the country’s stock of human capital H will lead to a% increase in steadystate output. Compare this result to the immediate impact of an unanticipated 10% increase in H (i.e., consider the impact of a 10% increase in H with the stock of capital unchanged).arrow_forwardQuestion 3 Consider the steady state of the Solow model with population growth and technological progress. (a) Use a graph to show what happens to steady-state capital per effective worker and output per effective worker in response to a decrease in the depreciation rate (?). Explain your answer. (b) Use a graph to show what happens to steady-state capital per effective worker and output per effective worker in response to a decrease in the population growth rate (?). Explain your answer. (c) Briefly explain any differences between the growth rate of output per worker (?⁄?) in the steady state when comparing your answers to parts (a) and (b). Define the steady state.arrow_forward
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