Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Let us consider a Solow growth model in which the aggregate production function time t for country / is given by: Yi = A(Ki) (eiLi
Let us consider a Solow growth model in which the aggregate production function time t for country / is given by: Yi = A(Ki) (eiLi ) 0.6 where Yt' is the aggregate real GDP in country i, Kt is the aggregate physical capital in country i, Ly is the aggregate number of worker in country i, e' is the average working time of a worker in country i, A > 0 is the total factor productivity (TFP) parameter, and a E (0,1) is the labour's share of output. The equilibrium law of motions of the physical capita per worker from time t to time t+1 in country i can be written as: (1 + n')ki+1 - ki = vyi - 0.04k; where n' E (-1, too) represents the growth rate of the population of workers in country i, y' E (0,1) is the investment rate in country i and yt denotes the output per worker in country i. a. Write-down the production function in per worker units and derive the steady-state real GDP per worker formula for country i. (15 points) yi = A ( KE ) 0.4 ( e; ) 0.6 a 1 V' 1-a yss = A1-a 6 + n
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started