Question
plus additional parameters: alpha = 0.22 and s=0.28 Answer the following questions. a) What is the steady state growth rate of total output Yt? b)
plus additional parameters: alpha = 0.22 and s=0.28
Answer the following questions.
a) What is the steady state growth rate of total output Yt?
b) What is the output per capita in period t = 10? Round your answer to 2 decimal points.
c) What is the steady state capital-output ratio k=y? Show your calculation of this ratio in the steady state. Round your answer to 2 decimal points.
d) Suppose people's wellbeing depends only on the level of their consumption. Imagine that a government could make a policy that decrease the parameter s by 0.01 while keeping every other parameter unchanged. Would the policy make people better off, unchanged, or worse in steady state? Why? Show your reasoning
e) Suppose a government considers a policy to lower the saving rate. What potential policies may the government consider? What are the challenges or drawbacks of these policies? List two policies that may help to lower the saving rate and briefly explain why?
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