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3) Consider an economy in the framework of Solow model with this production function: 1 4 Y, = 6K (AIN, )3 Where, A (the labor
3) Consider an economy in the framework of Solow model with this production function: 1 4 Y, = 6K (AIN, )3 Where, A (the labor improving technological progress), rises at 1.5% per year, N, labor force grows at 2% a year, depreciation rate is 5%, and saving rate is 25%. (Total 19 points) a) Find the steady state equilibrium of per effective worker capital, output and consumption. (4) b) Find the golden rule saving rate, and golden rule per effective worker consumption, and capital.(5) c)- In the steady state equilibrium, what are the growth rates of per worker output and total output. (3)
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