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4. The following tables show data on investment rates and output per worker for three pairs of countries. For each country pair calculate the ratio
4. The following tables show data on investment rates and output per worker for three pairs of countries. For each country pair calculate the ratio of GDP per worker in steady state that is predicted by the Solow model, assuming that all countries have the same values of A and 5 and the value of a is U3. Also assume that population growth is 0 in each country. Then calculate the actual ratio of GDP per worker for each pair of countries. For which pairs of countries does the Solow model do a good job of predicting relative income? Country Investment rates Output per Worker 2005 Belgium 30.4% $31750 Botswana 23.1% $8558 Country Investment rates Output per Worker 2005 Brazil 12.8% $9000 Mexico 24.1% $10546 Country Investment rates Output per Worker 2005
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