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Question 4: In 2009, the rate of investment in the United States was 17%, and in Brazil it was 20%. The value of the capital
Question 4: In 2009, the rate of investment in the United States was 17%, and in Brazil it was 20%. The value of the capital income share () in both countries is equal to 1/3. Let's assume that both the U.S. and Brazil have the same level of productivity and the same rate of depreciation. Further, let's assume that both countries can be described by the Solow model. What is the ratio of steady-state output per worker in U.S. to that in Brazil? How would the predicted ratio change if the value of were 1/4? Show your work in detail.
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