Question: 3.7. Learning-by-doing. Suppose that output is given by equation (3.22), Y(r) = KitA()L)], that L is constant and equal to 1, that K(t) = SY(t),

3.7. Learning-by-doing. Suppose that output is given by equation (3.22), Y(r) = KitA()L)], that L is constant and equal to 1, that K(t) = SY(t), and that knowledge accumulation occurs as a side effect of goods production: (t)-BY(t).

(a) Find expressions for gx(t) and gx(t) in terms of A(t), K(t), and the param- eters.

(b) Sketch the g = 0 and x = 0 lines in (94, 9k) space.

(c) Does the economy converge to a balanced growth path? If so, what are the growth rates of K, A, and Y on the balanced growth path?

(d) How does an increase in s affect long-run growth?

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