Consider the Solow growth model. Define the percent deviation of capital at timetfrom steady state as

KtKKt=K.

1. Derive an equation for the growth rate of capital from timetandt+1 in terms of parameters,1

Kt, and the steady state output/capital ratioY /K.

2. What is the principle of transition dynamics?

3. Relate the equation you derived in the first part of the question to the principle of transition dynamics.