The following are my questions please tutors help me....its complete please
Problem 1. Consider the growth model. Suppose that the total output produced at time f, Y, is governed by a Cobb-Douglas production function Y, = F(K,, L.) = KAL;- 0 -1, and the rate of capital depreciation is, 0 0 FK (K,. L.) > 0. FLL(K,, L.) 0 1" (k)
0. The country under consideration features an inefficient law enforcement system and an extensive degree of corruption, fraud, theft, and the like. As a result, when an individual agent decides how much invest, he/she expects a fraction n of his/her capital returns to be confiscated by other agents in the economy. (Note that this fraction of capital returns does not disappear from the economy; it simply becomes part of the income and consumption of other agents.) Now suppose that, starting from the steady state corresponding to the above conditions, the country undertakes a reform of its legal and law enforcement system. The reform reduces the effective rate of confiscateon from , to new, where 0 0. The government finances this spending g with a distortionary tax r on capital income. (i) Find the conditions that characterize the steady state and e and & . Use the phase diagram to describe this economy. (ii) Now suppose that, starting from the steady state corresponding to the above con- ditions, the government undertakes a reform which makes his government spending more productive, i.e. f, increases. The reform is unanticipated and the aforementioned change happens immediately and is expect to last for ever. Use the phase diagram to describe the initial steady state (prior to reform) and the new steady state (after the reform). What is the impact of the reform on the long-run levels of capital, output, consumption wages, and the interest rate? Explain the intuition behind these effects.Exercise 7 When the paintings were found at For Con, there was a great discussion about building the planned dam. Different entities have different preferences with respect to the decision to make. Assume that the three entities involved - archaeologists (A), EDP (B) and inhabitants (C) - select a representative to attend a decision meeting. Four proposals are at the table: to continue the construction not caring about the paintings (W). to stop the constrution (X), to continue the constrution protecting the paintings which might be visited (Y) and to continue the constrution and collecting the rocks which would be part of a big tourist park (Z). The three parties have different preferences with respect to the alternatives which they order in the following way (decreasing order of preference): <>