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More detail needed 1) Consider two countries that are identical in their technology, population growth, and rate of depreciation. Suppose that both countries are following

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1) Consider two countries that are identical in their technology, population growth, and rate of depreciation. Suppose that both countries are following neoclassical adjustments towards steady state, and that they have identical saving rates. Suppose that the initial capital stocks per labor are such that country A has a higher capital-labor ratio than country B; a) Argue that country B will never be richer than country A. You may draw a diagram if you wish. (20 ts) b) Now suppose that saving rate in country B is increased to a higher rate than that of country A. Follow the consequences of this shi on country B's adjustment path. Discuss the per capita levels of output under the steady state. (15 ms)

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