Consider a Solow economy that begins in steady state. Then a strong earthquake destroys half the capital

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Consider a Solow economy that begins in steady state. Then a strong earthquake destroys half the capital stock. Use a Solow diagram to explain how the economy behaves over time. Draw a graph showing how output evolves over time, and explain what happens to the level and growth rate of per capita GDP. 

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Macroeconomics

ISBN: 978-0393603767

4th Edition

Authors: Charles I. Jones

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