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1. Goods and services in this economy are produced using the Cobb-Douglas production function, F(K,L)=KL' where 0 0 and Gg is a constant. What is
1. Goods and services in this economy are produced using the Cobb-Douglas production function, F(K,L)=KL'"" where 0 0 and Gg is a constant. What is the growth rate of emissions in steady state in this economy? Let us define sustainable growth as a steady state with an improving environment. What condition in the above equation is necessary to guarantee sustainable growth? (d) Assume sustainable growth. Using your result in (b), draw a diagram for the emissions growth rate E that is "analogous\" to Solow's Fundamental Equation with capital stock per worker (k) on the x-axis. Clearly label the steady state level of capital per worker on your diagram. (Hint: Consider what happens when Gz = 0.) (e) Maintain the assumption of sustainable growth. Consider various cases where a country starts out below its steady state. Draw a graph(s) with the level of emissions E on the y-axis and time on the x-axis, and use it to describe as carefully as you can the time path(s) of pollution emissions as the country converges to its steady state. Comment on your findings
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