(20%) The Solow model and the capital income share.

a) Discuss the data and assumptions you need to measure the value ofin the production function.

b) Assume an economy saves according to the following rule "(accounting) profits are always reinvested, wages consumed". Derive the savings rate in this economy. Find the steady state level of capital per capita for this economy.

c) Discuss what is special about the steady state you characterized in b).