- Ke 1 1 B A 1 A K 1 N 1 Where K Is Per Capita Capital Stock At Date 1 K Is The Aggregate Capital Stock L I 1 (50.94 KiB) Viewed 40 times
ke+1 = 1 B A(1 - a)k, 1 + n 1+ where k, = is per capita capital stock at date 1, K, is the aggregate capital stock, L, is the size of the population and grows at the rate of n, L.+1 = (1 + n)L, B is the discount factor, 14, is the saving rate, A is the productivity of the economy, 1 -a is labor share, and a is capital share. The steady-state per capita consumption is written as K = L - c = Ak" - (n+8)k, where c is the steady-state per capita consumption, A is the productivity level, k is the per capita capital stock, 8 is the depreciation rate of capital, and n is the population growth rate. Use - a= a = B = 0.8, A = 18.9, n = 0.05, 8 = 0.1. Compute the steady-state value of k . Note that in steady state, ky = k1+1 = ACE holds. KCE is the steady-state per capita capital stock in the competitive economy. Answer: