Only typed solution 4. Suppose the economy is on a balanced growth path in the Romer model, and then, in the year 2030, researchproductivity z rises immediately and permanently to the new level z'.(a) Solve for the new growth rate of knowledge and yt.(b) Make a graph of yt over time using a ratio scale.(c) Why might research productivity increase in an economy?

The objective of the question is to understand the impact of an increase in research productivity on…

Answered: 4. Suppose the economy is on a balanced…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter16: Economic Growth

Section: Chapter Questions

Problem 6E

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What are the advantages of backwardness for economic growth?
Explain the difference between property rights and contractual rights. Why do they matter to economic growth?
Sweden and Norway are two neighboring countries in Northern Europe with similar savings rates, population growth rates, technology growth rates, and depreciation rates. However, Norway differs from Sweden in that Norway has large deposits of oil all along its coast, which makes it very easy for Norway to produce large quantities of crude oil every year with relatively little capital and labor. a) Draw a Solow Growth diagram that compares Sweden and Norway. What is the main difference between the two countries in the diagram? b) According to the Solow Growth Model, which country would have a higher standard of living in the long run? Which country would have a higher growth rate of its standard of living in the long run? c) Suppose now that, in the long run, oil becomes obsolete and has no value because it is uneconomical relative to renewable energy sources like solar and wind power. What would this do to your Solow Growth diagram in part a? How would the standard of living in Norway…
Question One. Answer the following pertaining to the growth theories. a) Derive the elasticity of the balanced-growth-path level of output with respect to savings rate. b) The Romer growth model assumed that growth rates if capital and knowledge are endogenously determined. Derive the growth rates of capital and knowledge. I want a answer in 15 min
1. Many endogenous growth models feature so called scale effects: per capita growth rises when population growth rises. Some economists have criticized these models for this reason, since countries with faster population growth do not in general appear to also experience faster per capita income growth. Consider an economy that has access to a production technology Y = AKª L¹-a where Y is output, A is the level of technology, K is capital and L is the amount of labor in the economy. Capital evolves according to K = SY (thus, the depreciation rate 6 = 0). The population growth rate is n. (Throughout, gx, where x can be any of the variables in the model). i. Assume that technology is determined by A =BK What sort of endogenous growth model is this? Find gk in terms of the K, L, and other parameters of the model. ii. Write an expression for gy in terms of gk and g₁. What must be true for a balanced growth path to exist in this model? Solve for the balanced growth path value of gy and gy,…
1.1. Basic properties of growth rates. Use the fact that the growth rate of a variable equals the time derivative of its log to show: (a) The growth rate of the product of two variables equals the sum of their growth rates. That is, if Z(t) = X(t)Y(t), then Ż(t)/Z(t) = [X(t)/X(t)] + [Ÿ(t)/Y(t)]. (b) The growth rate of the ratio of two variables equals the difference of their growth rates. That is, if Z(t) = X(t)/Y(t), then Ż(t)/Z(t) = [X(t)/X(t)]-[Y(t)/Y(t)]. (c) If Z(t) = aX(t)a, then Ż(t)/Z(t) = aX(t)/X(t).
7. Suppose that the economy's production function is Y = √K√LA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 6%, the rate of depreciation of capital (8) is equal to 5%, the number of workers grow at 5% per year and the rate of technological progress is 4%. (a) Find the steady state values of: iv. growth rate of output per worker growth rate of output v. (b) Suppose that the saving rate increases. What is its short-run and the long-run effect on the growth rate of per-capita output?
5. Suppose that the economy's production function is Y = √KVLA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 2.4%, the rate of depreciation of capital (6) is equal to 3%, the number of workers grow at 0.7% per year and the rate of technological progress is 3%. (a) Find the steady state values of: iv. v. growth rate of output growth rate of output per worker (b) Suppose that the growth rate of workers decreases. What is its short-run and the long-run effect on the growth rate of output per worker ?
An increase in research productivity: Suppose the economy is on a balanced growth path in the Romer model, and then, in the year 2030, research pro-ductivity z rises immediately and permanently to the new level z r. (a) Solve for the new growth rate of knowledge and yt.(b) Make a graph of yt over time using a ratio scale.
Economic Growth – End of Chapter Problem Discuss an example of technological progress not mentioned in the chapter and how it impacted economic growth. a. Henry Ford revolutionized the automobile industry with new production techniques for the Model T. He introduced an assembly line process, replacing the previous process which had required the workers and their equipment to move around the plant to each car that was being built. This technological change made workers much more b. Ford also instituted an 8-hour work day and a minimum wage of $5 per day. This increased workers' and, for the first time, automobiles were affordable for large numbers of people. More customers meant production of the Model T generated , lowering the average cost to produce a car. These productivity gains enabled Ford to lower the price of the Model T from $825 in 1908 to $260 in 1925.
5. Suppose that the economy's production function is Y = √K√LA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 2.4%, the rate of depreciation of capital (8) is equal to 3%, the number of workers grow at 0.7% per year and the rate of technological progress is 3%. (a) Find the steady state values of: i. 11. capital stock per effective worker output per effective worker growth rate of output per effective worker
4. Assume our endogenous growth model with 0<1. Now assume that a more open immigration policy suddenly boosts the US population growth rate to a higher constant rate: n'. Graph the short and long-run effects of this in a graph of the growth rate in ideas over time.

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