4. Consider the following endogenous growth model: a representative household's life-time utility function is given as: The production function is: Le t=0 -pt c(t)1-0 1-0 - 1 -dt. Y(t) = AK(t)ªH₂(t)1-a where Hp(t) denotes human capital used in production. Human capital accumulation equation is:
4. Consider the following endogenous growth model: a representative household's life-time utility function is given as: The production function is: Le t=0 -pt c(t)1-0 1-0 - 1 -dt. Y(t) = AK(t)ªH₂(t)1-a where Hp(t) denotes human capital used in production. Human capital accumulation equation is:
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter27: Investment, The Capital Market, And The Wealth Of Nations
Section: Chapter Questions
Problem 3CQ
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![4. Consider the following endogenous growth model: a representative household's life-time
utility function is given as:
pe C(t)!-o – 1
-dt.
1- 0
The production function is:
Y (t) = AK(t)ª Hp(t)'-a
where Hp(t) denotes human capital used in production. Human capital accumulation
equation is:
Н() — ВНE() — 6H(),
where HE(t) is human capital devoted to education. In total we have HE(t) + Hp(t)
H(t). Denote the fraction of human capital allocated to production by ø(t). Please go as
far as you can to characterize the balanced growth path of the economy.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3caab3d7-caa9-4397-b453-6bef89d56921%2Fbf6ddafc-e323-4461-a660-33b90a959083%2Fp5us5yt_processed.png&w=3840&q=75)
Transcribed Image Text:4. Consider the following endogenous growth model: a representative household's life-time
utility function is given as:
pe C(t)!-o – 1
-dt.
1- 0
The production function is:
Y (t) = AK(t)ª Hp(t)'-a
where Hp(t) denotes human capital used in production. Human capital accumulation
equation is:
Н() — ВНE() — 6H(),
where HE(t) is human capital devoted to education. In total we have HE(t) + Hp(t)
H(t). Denote the fraction of human capital allocated to production by ø(t). Please go as
far as you can to characterize the balanced growth path of the economy.
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