Question
Assume that the rate of depreciation is = 0.04, the population growth rate is n = 0.01, and continue to assume g=0. Show that
Assume that the rate of depreciation is = 0.04, the population growth rate is n = 0.01, and continue to assume g=0. Show that when 22 the production function is Y= K1/2 1/2 a rise in the saving rate from s= 0.05 to s = 0.1 increases steady-state output per capita from y=1 to y = 2. Show that the same change in the saving rate when the production 33 function is Y= K2/3 1/3 leads to output per capita rising from y= 1 to y= 4.
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