+ 4. In a Solow-type economy, total national saving, , is St St = sYt −hKt.

The extra term,

−hKt, reflects the idea that when wealth (as measured by the capital stock) is higher, saving is lower.

(Wealthier people have less need to save for the future.)

Find the steady-state values of per-worker capital, output, and consumption. What is the effect on the steady state of an increase in h?