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Please include steps and explanations
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Please include steps and explanations
Please include steps and explanations
The tax revenues of the government equal t percent of GDP, and the expenditures z percent of GDP (t>z). The level of public debt-to-GDP ratio at the end of the previous period was equal to bo. The nominal rate of interest is i, inflation equals a. What should be the population growth rate to make the government able to maintain the debt-to-GDP ratio at the level of b, in the long-run if the rate of technological progress is equal to x percent? Assume that the economy is in the steady state in the long-run as the Solow model predicts.
The tax revenues of the government equal t percent of GDP, and the expenditures z percent of GDP (t>z). The level of public debt-to-GDP ratio at the end of the previous period was equal to bo. The nominal rate of interest is i, inflation equals a. What should be the population growth rate to make the government able to maintain the debt-to-GDP ratio at the level of b, in the long-run if the rate of technological progress is equal to x percent? Assume that the economy is in the steady state in the long-run as the Solow model predicts.