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Question 1 (15 pts] Consider the human capital growth model with the representative consumer. The efficiency pa- rameter of human capital accumulation technology is b.
Question 1 (15 pts] Consider the human capital growth model with the representative consumer. The efficiency pa- rameter of human capital accumulation technology is b. The total productivity factor is given by : = 1.5. Denote by H, the human capital accumulated in period t, and by the time spent working in period t. Assume the initial human capital is H. = 1. Now, assume the consumer has to choose between (1) - (0.9,10.35) and (uz, b) - (0.8,5,20). 1. Using the predictions of the Endogenous Growth Model for the consumption path, which set of (u,b) will you recommend to the consumer in the long term. (06pts] 2. After how many years is your recommendation valid? (09pts] Question 1 (15 pts] Consider the human capital growth model with the representative consumer. The efficiency pa- rameter of human capital accumulation technology is b. The total productivity factor is given by : = 1.5. Denote by H, the human capital accumulated in period t, and by the time spent working in period t. Assume the initial human capital is H. = 1. Now, assume the consumer has to choose between (1) - (0.9,10.35) and (uz, b) - (0.8,5,20). 1. Using the predictions of the Endogenous Growth Model for the consumption path, which set of (u,b) will you recommend to the consumer in the long term. (06pts] 2. After how many years is your recommendation valid? (09pts]
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