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Consider the Solow's growth model. Derive an equation that determines the steady state level of capital per capita. Analyze the long-run effects on the steady
Consider the Solow's growth model. Derive an equation that determines the steady state
level of capital per capita. Analyze the long-run effects on the steady state of the following
changes to the environment:
(a) A fraction of the country capital stock gets destroyed. For this last case also explain in
detail what happens in the short run (i.e. the transition to the new steady state).
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