In the Solow growth model, suppose that the per-worker production function is given by y = zk.3,
Question:
(a) Suppose that in country A, z = 1. Calculate per capita income and capital per worker.
(b) Suppose that in country B, z = 2. Calculate per capita income and capital per worker.
(c) As measured by GDP per capita, how much richer is country B than country A? What does this tell us about the potential for differences in total factor productivity to explain differences in standards of living across countries?
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We want to solve Equation 619 for the given parameter values 0 25 zk 3 001 002 k From this we obta...View the full answer
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