Question
Consider the Basic Solow Model without exogenous growth: Y = AK^L^( 1 ) C =(1 s ) Y Y = C + I K =
Consider the Basic Solow Model without exogenous growth:
Y=AK^L^(1)
C=(1s)Y
Y=C+I
K=I+(1)K
where labor L is constant. Assume the following values for the rest of this question:
A=1000
=0.33
s=0.12
=0.09
L = 25
Suppose that initially, total capital (not per worker) is
K0=1000
Round the answer to at least three decimal places.
Compute capital per worker in the initial year.
Compute output per worker in the initial year.
Compute capital per worker in one year (i.e., compute k').
Compute output per worker in one year (i.e., compute y').
Calculate the growth rate of output per worker between years 0 and 1 as: y' - y) / y
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