Question: (a) Use the production function in equation (5.6) and the rules for computing growth rates from page 53 of Chapter 3 to write the growth
(a) Use the production function in equation (5.6) and the rules for computing growth rates from page 53 of Chapter 3 to write the growth rate of per capita GDP as a function of the growth rate of the capital stock.
(b) Combine this result with the last equation in footnote 7 (Section 5.9) to get a solution for the growth rate of per capita GDP as a function of the current level of capital Kt. Be sure to write your answer in terms of Kt and parameters of the model only. For example, use the fact that s̅Y*/K* = d̅.
Step by Step Solution
3.32 Rating (164 Votes )
There are 3 Steps involved in it
a Growth rate of GDP 13 growth rate of capital stock b Growth r... View full answer
Get step-by-step solutions from verified subject matter experts
