Prove each of the following statements about the steady state with population growth and technological progress. a.
Question:
a. The capital–output ratio is constant.
b. Capital and labour each earn a constant share of an economy’s income. [Hint: Recall the definition MPK = f(k + 1) − f(k).]
c. Total capital income and total labour income both grow at the rate of population growth plus the rate of technological progress, n + g.
d. The real rental price of capital is constant, and the real wage grows at the rate of technological progress g.
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a In the steady state we know that sy n gk This implies that ky s n g Since s n and g are constant t...View the full answer
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Related Book For
Macroeconomics
ISBN: 978-1464168505
5th Canadian Edition
Authors: N. Gregory Mankiw, William M. Scarth
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