1 The Solow Growth Model 1.1 Summary Production Function: Y (t) = F(K(t), A (t) L (t)). Accumulation of capital: K(t) = $Y (t) - 5K (t). (1) (2) Note: K(t) = dk (0) dt Labor: Lt) =n= L (t) = L (0e** Lt Technology: 93 A (t) = A (0) Production Function (1) exhibits constant-returns-to-scale (CRTS). This implies that: y = f (k), (3) where y = Y/AL and k= KAL. Expression (3) represents the production function (1) written in in- tensive form. Assumptions about (i) f0 = 0, (ii) f(k) >0, (in f" (ke) 0, (in f" (ke)

Answer rating: 100% (QA)

The Answer is in the image, click to view ... View the full answer