Refer to Problem 1 for data and assume now that the saving rate increases to 50%. Calculate the new steady-state values of the capitallabor ratio and output. Explain your answer graphically.

Data from Problem 1

Use the following table to find the steady-state values of the capital-labor ratio and output per worker (i.e., complete the table) if the per worker production function is yt = 2k_t^0.3:

Transcribed Image Text:

S Saving rate 8 Depreciation rate Population growth rate Technology n A k* Steady state ratio y* Steady state output capital-labor 0.3 0.05 0.02 2