Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

If an economy has the following production function, Y = AK () L (1) (Y: agg. output, A: total factor productivity, K: capital, L: labour).

If an economy has the following production function, Y = AK() L(1)

(Y: agg. output, A: total factor productivity, K: capital, L: labour).

and the investment function is : (n + )k , where < 1

and = 0.4.

Should optimal savings rate = capital share of income? Why or why not?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Econometric Analysis

Authors: William H. Greene

5th Edition

130661899, 978-0130661890

More Books

Students also viewed these Economics questions