In the Solow - Diamond model, the dynamics of the economy is characterized by the following equation: kt+1=11+nβ1+βA(1−α
Posted: Mon May 02, 2022 7:53 am
In the Solow - Diamond model, the dynamics of the economy is
characterized by the following equation: kt+1=11+nβ1+βA(1−α)kαt,
where kt=KtLt is per capita capital stock at date t,Kt is the
aggregate capital stock, Lt is the size of the population and grows
at the rate of n,Lt+1=(1+n)Lt,β is the discount factor, β1+β is the
saving rate, A is the productivity of the economy, 1−α is labor
share, and α is capital share. The steady-state per capita
consumption is written as c=Akα−(n+δ)k, where c is the steady-state
per capita consumption, A is the productivity level, k is the per
capita capital stock, δ is the depreciation rate of capital, and n
is the population growth rate. Use α=12,β=0.8,A=18.9,n=0.05,δ=0.1.
Compute the growth rate of the aggregate capital stock, Kt+1−KtKt,
in steady state where Kt is the stock of capital at time t and Kt+1
is the stock of capital at time t+1
characterized by the following equation: kt+1=11+nβ1+βA(1−α)kαt,
where kt=KtLt is per capita capital stock at date t,Kt is the
aggregate capital stock, Lt is the size of the population and grows
at the rate of n,Lt+1=(1+n)Lt,β is the discount factor, β1+β is the
saving rate, A is the productivity of the economy, 1−α is labor
share, and α is capital share. The steady-state per capita
consumption is written as c=Akα−(n+δ)k, where c is the steady-state
per capita consumption, A is the productivity level, k is the per
capita capital stock, δ is the depreciation rate of capital, and n
is the population growth rate. Use α=12,β=0.8,A=18.9,n=0.05,δ=0.1.
Compute the growth rate of the aggregate capital stock, Kt+1−KtKt,
in steady state where Kt is the stock of capital at time t and Kt+1
is the stock of capital at time t+1