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Problem 2 The evolution of the aggregate capital stock, K,, and the aggregate production function follow according to K+1 B 5 (1a)K, and Y. =K,
Problem 2 The evolution of the aggregate capital stock, K,, and the aggregate production function follow according to K+1 B 5 (1a)K, and Y. =K, , where Y, is the aggregate 1+ B output of the economy, and is the discount factor, and 1+ is the saving rate, and 1-a is labor share, and a is capital share. Y+1 Q4: Compute the growth rate of the aggregate output, 1+g, = Y, Q5: Is the growth rate of the aggregate output an increasing function of the saving rate? Q6: Is the growth rate of the aggregate output an increasing function of labor share
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