Question
3. a. Use the Solow model to determine the a) instantaneous impact on GDP per capita, b) instantaneous impact on consumption per capita, c) impact
3. a. Use the Solow model to determine the a) instantaneous impact on GDP per capita, b) instantaneous impact on consumption per capita, c) impact on long-run GDP per capita, d) impact on long-run consumption per capita, e) impact on long-run GDP per capita growth rate, and f) impact on long-run GDP growth rate of an instantaneous and permanent increase in the population growth rate n, through a permanently higher immigration rate, say. Assume the country begins at its steady state value of k* before this event occurs. Justify your answer by use of graph and/or equation.
Graph the path of yt and ct against time for the event analyzed in part a.
Use the Solow model to determine the a) instantaneous impact on GDP per capita, b)
instantaneous impact on consumption per capita, c) impact on long-run GDP per capita, d) impact on long-run consumption per capita, e) impact on long-run GDP per capita growth rate, and f) impact on long-run GDP growth rate of an instantaneous and one-time jump in the population Nt, through a single episode of wartime refugee immigration, say. Assume the country begins at its steady state value of k* before this event occurs. Justify your answer by use of graph and/or equation. [Hint: this should not be considered a change in n, since the population continues to grow at rate n after the one-time jump; it should be modeled as a one- time jump in Nt.] d. Graph the path of yt and ct against time for the event analyzed in part c.
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