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Assume that an economy can be described by the following production function: Y = K HB(AL) 1-a-B Y H We define y = h= K
Assume that an economy can be described by the following production function: Y = K HB(AL) 1-a-B Y H We define y = h= K AL' and k = AL' AL Note that at steady-state:Ak = 0 = Sk - (n + g + d)k, and Ah = 0 =SH - (n+ g + d)h where (i) n is the growth rate of labour, L, (ii) g is the growth rate of physical capital, K, (iii) d is the depreciation rate of physical capital, and (iv) sK and SH are the share of output that is invested in physical and human capital, respectively. 1 a SK SH P71-a-B Show that in the steady-state, yss = (n+g+d). (n+g+d)
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