Question
Need help answering this question: Consider reduced form of the solow growth model: Let y = f(k) = k y is output per worker, k
Need help answering this question:
Consider reduced form of the solow growth model:
Let y = f(k) = k
y is output per worker, k is capitalstock per worker, and 0 < < 1
k = sy (n + d)k In steady state, k = 0.
Suppose that the saving rate is s (0, 1), the depreciation rate is d = 0, and the rate of population growth is n > 0 2 1.
Suppose that Government of Canada passes a new law on immigration that lowers the inflow of immigrants. As a result, the rate of population growth falls from n to n new, where 0 < nnew < n. For simiplicity, suppose that this change happens instantaneously and will last for ever. Suppose further that the economy was in steady state before this change. What is the long-run impact of the new law on the k ? the steady state per-capita capital stock, and output per capita (y ? ).
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