Suppose an economy described by the Solow model is in steady state with population growth n of 1.8 percent per year and technological progress g of 1.8 percent per year. total output and total capital grow at 3.6 percent per year. suppose further that the capital share of output is 1/3. if you used the growth accounting equation to divide output growth into three sources- capital, labor, and total factor productivity- how much would you attribute to each source? compare your results to the figures we found for the united states in tables 9-2.

Suppose an economy described by the Solow model is in steady state with population growth n of 1.8 percent per year and technological progress g of 1.8 percent per year. total output and total capital grow at 3.6 percent per year. suppose further that the capital share of output is 1/3. if you used the growth accounting equation to divide output growth into three sources- capital, labor, and total factor productivity- how much would you attribute to each source? compare your results to the figures we found for the united states in tables 9-2.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 5P

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Suppose an economy described by the Solow model is in a steady state with population growth n of 1.8 percent per year and technological progress g of 1.8 percent per year. Total output and total capital grow at 3.6 percent per year. Suppose further that the capital share of output is 1/3. If you used the growth-accounting equation to divide output growth into three sources—capital, labor, and total factor productivity—how much would you attribute to each source?
An economy described by the Solow growth model has the following production function: y = Vk A. Solve for the steady-state value of y as a function of s, n, g, and d. B. A developed country has a saving rate of 28 percent and a population growth rate of 1 percent per year. A less developed country has a saving rate of 10 percent and a population growth rate of 4 percent per year. In both countries, g = 0.02 and d= 0.04. Find the steady- state value of y for each country. C. What policies might the less developed country pursue to raise its level of income?
Draw a well labeled graph that illustrates the steady state of the solow model with population growth. Use the graph to find what happens to steady state capital per worker and income per worker in response to each of the following exogenous changes D. A one time permanent improvement in technology increases the amount of output that can be produced from any given amount of capital and labor. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Production function is given by Y= (1/2)K^a(AN)^(1-a), where a=2/3. The rate of depreciation of capital is equal to 15 percent, the rate of technological progress is equal to 3 percent, and the rate of population growth is equal to 2 percent. The economy was in the steady state at time tand the level of technology was equal to A=80. Use the Solow growth model to answer the following questions. 1. If the saving rate s=80 percent, the steady state level of output per unit of effective labor at time tis equal to ... 2. If the saving rate s=80 percent, the steady state level of consumption per unit of effective labor at time tis equal to ... 3. If the saving rate s=80 percent, the steady state level of consumption per worker at time tis equal to ..
Evaluate the following statement. People do not save enough or invest enough in their education. What would be the arguments for and against government policies that encourage an increase in private savings and more investment in education? Using appropriate equations and graphs, consider the implications of both the Solow growth model and the endogenous growth model, but also their limitations, when addressing these questions.
Which of the following is an incorrect statement about the variable ‘s’ in the Solow Growth Model? a.s is the fraction of income that is saved b.s is an exogenous factor c.s is referred to as saving per worker d.s determines how income is allocated between consumption and investment
Use the Solow model with exogenous growth to answer the following.Q 3.1: Following a reduction in the population growth rate, output per worker growth permanently increases. True or False Q 3.2: Following a reduction in the population growth rate, output per worker growth permanently increases. True or False Q 3.3: The only way to increase the long-run growth rate of output per worker is to increase the growth rate of labor efficiency. True or False Q 3.4: Following a decrease in TFP, output per worker growth temporarily declines. True or False
Consider the following numerical examples for the Solow Growth Model: Economy A z=1 s=0.5 F(K,N)=K0.3N0.7 n=0.01 d=0.1 Economy B z=1 s=0.2 F(K,N)=K0.3N0.7 n=0.01 d=0.1 In which economy is GDP per capita higher in steady state? O Economy A O Economy B O Not enough Information
Consider the following numerical examples for the Solow Growth Model: Economy A z=1 s=0.5 F(K,N)=K0.3N0.7 n=0.01 d=0.1 Economy B z=1 s=0.2 F(K,N)=K0.3N0.7 n=0.01 d=0.1 In which economy is Consumption per capita higher in steady state? O Economy A O Economy B Not enough Information
The Solow Growth Model is an exogenous model of economic growth that analyzes changes in the level of output in an economy over time as a result of changes in the population growth rate, the savings rate, and the rate of technological progress. Consider the Solow model. a) Explain using a graph why there is a poverty trap in this model b)Describe how an economy such as one characterized by this model may break out of a poverty trap.
Graphically illustrate and explain the effects of an increase in the rate of technology on the Solow growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this increase in the growth of technology.
Draw a well- labeled graph that illustrates the steady state of the Solow model with population growth. Use the graph to find what happens to steady-state capital per worker and income per worker in response to each of the following exogenous changes. A change in weather patterns increases the depreciation rate. b. Better birth-control methods reduce the rate of population growth.