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(b) In lecture, we assumed the following aggregate production function Y : AK D'H 1 (1) where Y is output, K is physical capital, H

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(b) In lecture, we assumed the following aggregate production function Y : AK D'H 1\" (1) where Y is output, K is physical capital, H is human capital and a. E (0, 1). GDP per capita can then be expressed as Y K a H 10: N A (N) (N) '2) where N is population. Dene lower case variables as m : X /N and show that the logarithm of the relative GDP per capita between any two countries c and c' can then be written as [09(Ac) _log(Ac')+a [log(kc) _ log(kc')l +(1 O) [log(hc) _ log(h'6')l (3)

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