Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2 Golden Rule Capital Again, start with the equation of motion for the Solow Growth model kg+1(l + n) = 371+ 3k? - 5k: and

image text in transcribed
2 Golden Rule Capital Again, start with the equation of motion for the Solow Growth model kg+1(l + n) = 371+ 3k? - 5k: and parameter values 6 = 0.06, n = 0.01 (population is shrinking) and o = 0.5. Set the savings rate 3 = 0.1 l. Solve for the golden rule steady state? 2. How much consumption would be gained by consuming at the golden rule steady state compared to the steady state consumption with s = 0.1. 3. Suppose that you begin at the steady state capital per capita associated with s = 0.1 in period 0. Again, number a spread sheet with periods from 0 to 100. In period 1, set the savings rate to the golden rule steady state and then compute kg through period 100. How close do you get to the new steady state? 4. In the first period after 3 changes to the golden rule, 39,. is consumption higher or lower? In period 100

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Chinese Economy Transitions And Growth

Authors: Barry Naughton

1st Edition

0262640643, 9780262640640

More Books

Students also viewed these Economics questions