Question
Need help solving this question:(Solow Growth Model) Consider reduced form of the solow growth model: Let y = f(k) = k y is output per
Need help solving this question:(Solow Growth Model)
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
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 ? )
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