Question
Suppose that the production function in the economy is Cobb-Douglas with capital share 0.3, output growth is 2.5% per year, depreciation is 4% per year,
Suppose that the production function in the economy is Cobb-Douglas with capital share 0.3, output growth is 2.5% per year, depreciation is 4% per year, and the capital-output ratio is 2. Suppose further that this economy is in a steady state. What is the saving rate (in percentage) that is consistent with this steady state?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Microeconomics
Authors: Paul Krugman, Robin Wells
3rd edition
978-1429283427, 1429283424, 978-1464104213, 1464104212, 978-1429283434
