In a Solow-Swan-type economy, total national saving St is St = sYt - hKt The extra term,
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St = sYt - hKt
The extra term, -hKt reflects the idea that when wealth (as measured by the capital stock) is higher, saving is lower. (Wealthier people have less need to save for the future.)
Find the steady-state values of per-worker capital, output, and consumption. What is the effect on the steady state of an increase in h?
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Related Book For
Macroeconomics
ISBN: 978-0321675606
6th Canadian Edition
Authors: Andrew B. Abel, Ben S. Bernanke, Dean Croushore, Ronald D. Kneebone
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