The Parable of the Broken Window by Frdric Bastiat.There is a common argument made in the media still today that disaster and destruction is "good for economic growth".This is not a new argument.In an 1850 essay the French economist Frdric Bastiat illustrated why destruction, and the money spent to recover from destruction, is not actually a net benefit to society.Bastiat focused on the opportunity costs of the money used in the recover effort to make his arguments.This problem asks you to use the Solow model instead to investigate this claim.

a.In what sense could someone legitimately claim that "destruction is good for economic growth"?Show your answer in a Solow model graph and time paths.

b.Using your understanding of the Solow model, evaluate the claim that "destruction is good for economic growth" and hence "good for the economy".Use clear, straightforward Solow model analysis and then extend your argument through basic logic and argumentation.You should have clear technical arguments to support your analysis.