Q12. Quantifying the effects of capital taxation. (a) In the textbook, the following expression is given for the steady-state level of production per person in the labour force (Y/L) as a function of a,,r,,E and u : LY=((1+)(r+))1E(1u) Using this expression, assume a=1/3,=0.1,=0.06,E=1000, and u=0.1 and calculate the steady state production per person for r=0.06,r=0.09, and r=0.12. (b) Comment on the result - are the differences in output per person in part (a) large or small relative to the kinds of differences that we observe in the real world between rich and poor countries? Q12. Quantifying the effects of capital taxation. (a) In the textbook, the following expression is given for the steady-state level of production per person in the labour force (Y/L) as a function of a,,r,,E and u : LY=((1+)(r+))1E(1u) Using this expression, assume a=1/3,=0.1,=0.06,E=1000, and u=0.1 and calculate the steady state production per person for r=0.06,r=0.09, and r=0.12. (b) Comment on the result - are the differences in output per person in part (a) large or small relative to the kinds of differences that we observe in the real world between rich and poor countries