Q1 The Green Solow Model 30 Points Consider the following Cobb-Douglas production function in the context of the Green Solow Model where a = 2 Y = K (BL) Q1.1 Capital accumulation 5 Points Using this production function, write down the expression for Ak. Your answer should be in pe effective unit form (divide all terms by BL) and should be specific to the functional form given (remember that a = 3). Please select file(s) Select file(s) Save Answer Q1.2 Steady state level of capital 10 Points Solve your expression in part 1.1 for the steady state level of capital per effective worker, k*. Note that in the steady state Ak = 0. Please select file(s) Select file(s) Q1.3 Steady state level of income 5 Points Given that y = f(k), find the corresponding steady state level of income per effective worker, y*. Please select file(s) Select file(s) Save Answer Q1.4 Regulations 5 Points Assume that environmental regulations become more restrictive. For this reason, the fraction of output devoted to abatement, 0, is increased. How does this change impact the saving locus and path of emissions? Illustrate using a graph. Please select file(s) Select file(s) Save Answer Q1.5 Balanced growth 5 Points Consider the growth rate of emissions along the balanced growth path: GE = 9B +n - 9A Assume that the population growth rate is 1%, the rate of technological progress is 4%, and the rate of technological progress in abatement is 2%. Is growth sustainable? Why or why not? Please select file(s) Select file(s) Q1 The Green Solow Model 30 Points Consider the following Cobb-Douglas production function in the context of the Green Solow Model where a = 2 Y = K (BL) Q1.1 Capital accumulation 5 Points Using this production function, write down the expression for Ak. Your answer should be in pe effective unit form (divide all terms by BL) and should be specific to the functional form given (remember that a = 3). Please select file(s) Select file(s) Save Answer Q1.2 Steady state level of capital 10 Points Solve your expression in part 1.1 for the steady state level of capital per effective worker, k*. Note that in the steady state Ak = 0. Please select file(s) Select file(s) Q1.3 Steady state level of income 5 Points Given that y = f(k), find the corresponding steady state level of income per effective worker, y*. Please select file(s) Select file(s) Save Answer Q1.4 Regulations 5 Points Assume that environmental regulations become more restrictive. For this reason, the fraction of output devoted to abatement, 0, is increased. How does this change impact the saving locus and path of emissions? Illustrate using a graph. Please select file(s) Select file(s) Save Answer Q1.5 Balanced growth 5 Points Consider the growth rate of emissions along the balanced growth path: GE = 9B +n - 9A Assume that the population growth rate is 1%, the rate of technological progress is 4%, and the rate of technological progress in abatement is 2%. Is growth sustainable? Why or why not? Please select file(s) Select file(s)
