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Transition Dynamics in the combined Solow-Romer model; Consider the combined model studied in Macro_6_2. Suppose the economy begins on a balanced growth path in the
Transition Dynamics in the combined Solow-Romer model; Consider the combined model studied in Macro_6_2. Suppose the economy begins on a balanced growth path in the year 2000. Then in 2030, the depreciation rate d rises permanently to the higher level d' (a) Graph the behavior of output per person over time. (b) Explain what happens to the growth rate of output per person over time and why. Transition Dynamics in the combined Solow-Romer model; Consider the combined model studied in Macro_6_2. Suppose the economy begins on a balanced growth path in the year 2000. Then in 2030, the depreciation rate d rises permanently to the higher level d' (a) Graph the behavior of output per person over time. (b) Explain what happens to the growth rate of output per person over time and why
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