1) The number of scientists and engineers engaged in R&D has been growing faster than the...

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1) The number of scientists and engineers engaged in R&D has been growing faster than the rate of population growth in the advanced economies of the world. To take some plausible numbers, assume population growth is 1 percent and the growth rate of researchers is 3 percent per year. Assume that has been constant at about 2 percent per year. a) Using the 24 = (1-0) equation, calculate an estimate of 2/(1-4). b) Using the growth rate formula, calculate an estimate of the long-run steady-state growth rate of the world economy. 2) In the simplified Romer model, we assumed that the production function for new technology (or ideas) was given by: A = OLA. a) Suppose that p > 0. What does this imply for the relationship between the current technology level and the difficulty of discovering new ideas? What is the name of this effect? b) Suppose that < 0. What does this imply for the relationship between the current technology level and the difficulty of discovering new ideas? What is the name of this effect? 3) The country Solowia has the Cobb_Douglas aggregate production function as Y = K 0.5 10.5. where Y is aggregate total output and K is the aggregate capital and L is the labor force. The depreciation rate is 8 = 0.05 and the population growth rate is n=0.01. The Consumption function is C=0.7Y, where C is total national consumption and Y is total output. a. What is the steady-state value of the capital-labor (k*) ratio? b. What is the steady-state value of output per worker (yº)? c. What is the steady-state value of consumption per worker (c*)? d. What is the steady-state value of investment per worker (i*)? 4) Consider the output per worker along the balanced growth path in the simple model of growth and development and answer why some countries are richer than others. Interpret these parameters by using the arguments that we discuss in our lectures. a/1-a (eu) ¹/² A* (t) y* (t) = (SK \n+g+6/ 5) Consider the AK growth model and Original Solow model in terms of share of capital (a) assumptions. Draw and interpret the implications of these model's transition dynamics with regards to impact of shocks that hit the economy (i.e an increase in the saving rate) and transition dynamics of steady state in economy. 6) Describe the final goods producing sector in the Romer (1990) model. Is there perfect or imperfect competition? Write down the production function and the profit maximization problem of the firm (or firms) in this sector. Derive the first order optimality condition. 7) Write the name of all economic growth models that have been discussed in lectures. 8) Suppose policymakers want to increase the growth rate of an economy and they increased savings rate. Considering the Solow model without technology, please show graphically the short- and long-term effects of this policy change on the growth and level of income per capita? Bonus Questions (25 points) 1- According to the seminar, what are the research areas of Ufuk Akçiğit? 2- According to the seminar, what is the general characteristic of developed countries? 3- In the seminar, which policies have been proposed to promote long-term growth rate for Turkey? 4- According to the seminar, which date is the breakpoint for Turkey in terms of firm productivity and dynamics of the market? 5- Overall, write down an important point that this seminar brought to you. 1) The number of scientists and engineers engaged in R&D has been growing faster than the rate of population growth in the advanced economies of the world. To take some plausible numbers, assume population growth is 1 percent and the growth rate of researchers is 3 percent per year. Assume that has been constant at about 2 percent per year. a) Using the 24 = (1-0) equation, calculate an estimate of 2/(1-4). b) Using the growth rate formula, calculate an estimate of the long-run steady-state growth rate of the world economy. 2) In the simplified Romer model, we assumed that the production function for new technology (or ideas) was given by: A = OLA. a) Suppose that p > 0. What does this imply for the relationship between the current technology level and the difficulty of discovering new ideas? What is the name of this effect? b) Suppose that < 0. What does this imply for the relationship between the current technology level and the difficulty of discovering new ideas? What is the name of this effect? 3) The country Solowia has the Cobb_Douglas aggregate production function as Y = K 0.5 10.5. where Y is aggregate total output and K is the aggregate capital and L is the labor force. The depreciation rate is 8 = 0.05 and the population growth rate is n=0.01. The Consumption function is C=0.7Y, where C is total national consumption and Y is total output. a. What is the steady-state value of the capital-labor (k*) ratio? b. What is the steady-state value of output per worker (yº)? c. What is the steady-state value of consumption per worker (c*)? d. What is the steady-state value of investment per worker (i*)? 4) Consider the output per worker along the balanced growth path in the simple model of growth and development and answer why some countries are richer than others. Interpret these parameters by using the arguments that we discuss in our lectures. a/1-a (eu) ¹/² A* (t) y* (t) = (SK \n+g+6/ 5) Consider the AK growth model and Original Solow model in terms of share of capital (a) assumptions. Draw and interpret the implications of these model's transition dynamics with regards to impact of shocks that hit the economy (i.e an increase in the saving rate) and transition dynamics of steady state in economy. 6) Describe the final goods producing sector in the Romer (1990) model. Is there perfect or imperfect competition? Write down the production function and the profit maximization problem of the firm (or firms) in this sector. Derive the first order optimality condition. 7) Write the name of all economic growth models that have been discussed in lectures. 8) Suppose policymakers want to increase the growth rate of an economy and they increased savings rate. Considering the Solow model without technology, please show graphically the short- and long-term effects of this policy change on the growth and level of income per capita? Bonus Questions (25 points) 1- According to the seminar, what are the research areas of Ufuk Akçiğit? 2- According to the seminar, what is the general characteristic of developed countries? 3- In the seminar, which policies have been proposed to promote long-term growth rate for Turkey? 4- According to the seminar, which date is the breakpoint for Turkey in terms of firm productivity and dynamics of the market? 5- Overall, write down an important point that this seminar brought to you.

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