Consider the Solow Model where technology is assumed to be given by Y = A K/4L3/4...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider the Solow Model where technology is assumed to be given by Y = A K¹/4L3/4 In addition, capital is assumed to depreciate at rate 0 < < 1, every period. Savings are assumed to be a fixed fraction of Income Y. And L is assumed to grow at a constant rate n. Y a) Derive the production function for output per worker y = Show all your work b) Derive the law of motion for capital per worker k = ? Show all your work. d) c) Derive the steady state value of capital per worker and output per worker. Show all your work. Show your answer in a diagram, with capital per worker on the horizontal axis and output on the vertical axis. Make sure you mark on your diagram what the steady state values for capital, output and consumption per worker are. e) Assume that Labor is constant over time (n = 0). Use a diagram with k on the horizontal axis and kt+1 on the vertical axis to show that the economy will converge over time to the steady state, no matter what the initial level of capital per worker is. Make sure to clearly label your axis and curves. Consider the Solow Model where technology is assumed to be given by Y = A K¹/4L3/4 In addition, capital is assumed to depreciate at rate 0 < < 1, every period. Savings are assumed to be a fixed fraction of Income Y. And L is assumed to grow at a constant rate n. Y a) Derive the production function for output per worker y = Show all your work b) Derive the law of motion for capital per worker k = ? Show all your work. d) c) Derive the steady state value of capital per worker and output per worker. Show all your work. Show your answer in a diagram, with capital per worker on the horizontal axis and output on the vertical axis. Make sure you mark on your diagram what the steady state values for capital, output and consumption per worker are. e) Assume that Labor is constant over time (n = 0). Use a diagram with k on the horizontal axis and kt+1 on the vertical axis to show that the economy will converge over time to the steady state, no matter what the initial level of capital per worker is. Make sure to clearly label your axis and curves.
Expert Answer:
Answer rating: 100% (QA)
a To derive the production function for output per worker y we divide the total output Y by the labor force L Given Y A K14 L34 Dividing both sides by ... View the full answer
Related Book For
Cost-Benefit Analysis Concepts and Practice
ISBN: 978-1108401296
5th edition
Authors: Anthony E. Boardman, David H. Greenberg, Aidan R. Vining, David L. Weimer
Posted Date:
Students also viewed these economics questions
-
Analyze the ecological dynamics of microbial communities in extreme environments, such as deep-sea hydrothermal vents or acidic hot springs, focusing on their metabolic interactions, diversity...
-
Kevin reported several tax preference items in taxable income in 2019. The normal federal tax in 2019 was $35,000 and the alternative minimum tax (AMT) was $52,000. In 2020 Niko earned only...
-
Gayle runs at a speed of 4.45 m/s and dives on a sled, initially at rest on the top of a frictionless snow-covered hill. After she has descended a vertical distance of 5.00 m, her brother, who is...
-
JOB SHEETS: Job cost sheets for each of the ten jobs appear on this sheet. Additionally, a combo box for each job (ten combo boxes total) appears for each job. Further, on this sheet, a check box...
-
A vertical gate keeps water from flowing in a triangular irrigation channel. The channel has a 4-m top width and a 3-m depth. If the channel is full, what is the magnitude of the hydrostatic force on...
-
What does it mean to say an energy state is discrete?
-
Financial intermediaries are business organizations that receive funds in one form and repackage them for the use of those who need funds. Through financial intermediation, resources are allocated...
-
Roman Products, Inc., is a wholesaler of mens hair products. The company began operations on January 1, 2010. The following transactions relate to securities acquired by Roman Products, Inc., which...
-
\f
-
When coal is burned to form synthesis gas (syngas), which contains mostly CO, H 2 , H 2 S, and CO 2 , the H 2 S must be removed. The gas is called syngas because H 2 and CO are the building blocks...
-
Bunnell Corporation is a manufacturer that uses job-order costing. On January 1, the company's inventory balances were as follows: Raw materials $ 50,500 Work in process Finished goods $ 25,000 $...
-
! Required information [The following information applies to the questions displayed below.] In Year 1, Company A acquired Company B for $464 million, of which $74 million was allocated to goodwill....
-
How much is the total income of the company if La Union is discontinued? Malley Sales Company operates three branches in Baguio, Dagupan and La Union. When Mr. Sy, the president, reviewed the...
-
1.) Identify the sampling technique used: Simple Random Sample (SRS), Convenience, Systematic, Stratified, or Cluster. And please explain why. a) A Los Angeles Times reporter gets a reaction to a...
-
Shawna purchased a used car at Farmer Jane's Used Cars. Before buying the car Shawna asked the salesperson if the vehicle was ever in an accident in the past and she was told it had not and it was in...
-
The effectiveness of cognitive behavioral therapy (CBT) in treating adult depression is the primary focus of my research. The final capstone project is a series of written research-based assignments...
-
Assume that you want to invest a sum of money at 11% in order to have $1,500 (a) at the end of one year (b) at the end of two years. Calculate the present value using PV tables. (Round present value...
-
Determine the reactions in supports A and D and connections B and C. Sketch its shear and moment diagram and determine the magnitude ankoration of the maximum shear and moment for every member. 18 3...
-
The effects of a tariff on imported kumquats can be divided into the following categories: tariff revenues received by the treasury ($8 million); increased use of resources to produce more kumquats...
-
The initial cost of constructing a permanent dam (i.e., a dam that is expected to last forever) is $830 million. The annual net benefits will depend on the amount of rainfall: $36 million in a dry...
-
If we take the survey results at face value, then it would be reasonable to interpret the $8.5 million annual willingness to pay as the aggregate annual option price. If the costs of the unit were...
-
If money is owed to the auditor, what can an auditor do and what risks are involved?
-
Internal Control Procedures for Cash Receipts} Corey and Dee Post are planning to open and operate a 24 -hour convenience store near a university campus. Corey and Dee are concerned that part of the...
-
What is a principal auditor? What must he consider when the work of another auditor is used?
Study smarter with the SolutionInn App