Exercise 1. One more empirical improvement obtained by adding human capital We opened this chapter by summarizing two main empirical shortcomings of the general Solow model. One was that its steady state prediction tends to understate the influences of saving and population growth rates on GOP per person. There may be another one that also concerns the general Solow model's steady state prediction which is (setting ng ~ 0):

a In Y7 =In A,+ --[In SK-ln(n + g + o)].