Answer Happy

where the time and the The law of motion for capita tak... www Productivity and labor grow a fixed rates and you L-(1+ L Let k-K(A.L.) denote capital per effective units of about me-T.AL output per effective units of labour at times. -C.CALS) on per effective units of labour at timet; i=1/(AL) investment per effective units of labour at time and is the retum capital at time t. 1. Write down the profit maximization problem of the firm and made and capital shares in the economy (w.L./Y) and (r. K1) 2. What is the gross growth rate of capital per unit of effective labout a function of the parameters of the model and k-1. 3. Find the steady-state level of: a) the capital stock per effective la kss, b) output per effective labour units Yss and c) investment per units of labour iss. Plot the following on a single graph: y =f(k show where the steady state is on the graph. 4. What is the growth rate of capital and of output in steady-st 5. Is the capital-output ratio constant in steady state? Is retur constant in steady state? How about steady-state wage? growth for wages? 6. What is the golden rule level of k for this economy, kg- golden rule level of the capital stock kgr maximizes in steady-state. 7. Let's say that a benevolent social planner wishes to state. What is the associated savings rates sgr tha social planner to support kgr?
The Solow Growth Model 2.2 Consider the Solow growth model. The parameters of the model an uch: s= 0.1 (savings rate) and = 0.05 (depreciation rate). Consider the production function: Y+=(A_L_)0:3 K:41 't.