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Yt=Kt^ L(1). Consider two imaginary countries, indexed A and B. Each economy can be characterised by the model above, but the population is constant in
Yt=Kt^ L(1).
Consider two imaginary countries, indexed
A and B. Each economy can be characterised by
the model above, but the population is constant in both economies. In the steady state, GDP
per worker in country A is 1.44 times that of country B
and the ratio of physical investment to
output is 0.3 in country A
and 0.25 in country B. The rate of depreciation is the same in both
countries. What must
be in order for the model to fit these facts?
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