Question
5. Consider the version 2 of the Solow model with a non-zero exogenous population growth, as discussed in Chapter 4. Recall that this iteration of
5. Consider the version 2 of the Solow model with a non-zero exogenous population growth, as discussed in Chapter 4. Recall that this iteration of the Solow model is identical to the version 1 except that the assumption of =0 is now replaced with the assumption that =>0, i.e., the population/labor is no longer assumed to be fixed but is said to grow at a constant rate . Following the steps of derivation of the =() equation for the v.1 model (see your class notes for that), derive the analogous equation [=()(+)] for the v.2 model. Show each step of your derivation. [Hint: start with the total capital's law of motion =.]
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