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Problem-1 Introduce government activity in the endogenous growth model as follows. In addition to working u units of time in producing goods, the representative consumer
Problem-1 Introduce government activity in the endogenous growth model as follows. In addition to working u units of time in producing goods, the representative consumer works v units of time for the government and produces gvH goods for government use in the current period, where g>0 The consumer now spends 1uv units of time each period accumulating human capital. Suppose that v increases with u decreasing by an equal amount. Determine the effects on the level and the rate of growth of consumption. Draw a diagram showing the initial path followed by the natural logarithm of consumption and the corresponding path after v increases
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