Question
Suppose the government estimates that in the coming decades Canada will experience a capital stock that grows at 5% per year, population & labour force
Suppose the government estimates that in the coming decades Canada will experience a capital stock
that grows at 5% per year, population & labour force growth rate of 1.3% per year (half of which
comes from immigration), total factor productivity grows at 1.1% per year and capital earns 30% of
GDP as income. As a result, determine the very long-run grow rates of real GDP and real GDP per
capita. Suppose the government wants to speed up the growth rate of the standard of living as
measured by the real GDP per capita, what change to the country's immigration policy should they
implement? Explain why this works (or would not work).
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