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boom following the floods. Suppose they propose a cash for clunkers-like scrappage scheme, as was done in the United States during the Great Recession (http://en.wikipedia.org/wiki/Scrappage_program).

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boom following the floods. Suppose they propose a "cash for clunkers"-like scrappage scheme, as was done in the United States during the Great Recession (http://en.wikipedia.org/wiki/Scrappage_program). Under this scheme, the government destroys a part of the existing capital stock. Suppose they commit to destroying an additional 10% of the capital stock every year, so that the depreciation rate becomes 0.2 in the other countries. What is the implication for growth over the next five years in the other countries and their steady-state levels of output? Would you recommend these countries for this scrappage scheme

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