09.2 What factor given by Kaldor cannot be explained by the Solow model given in 09. We did not learn the Solow model with the concept \"output per worker" or \"capital per worker" but think of it as just output and capital. With your understanding of the Solow model, just explain what the Solow model cannot explain out of the four facts listed below. Just picking a number will not be sufcient. 9.1.1 Kaldor's Growth Facts The British economist Nicholas Kaldor pointed out the following stylized growth facts (empirical regularities of the growth process) for the US and for most other industrialized countries. 1. Output (real GDP) per worker y = 31: and capital per worker 14: = If grow over time at relatively constant and positive rate. See Figure 9.1.1. 2. They grow at similar rates, so that the ratio between capital and output, % is relatively constant over time 3. The real return to capital 'r (and the real interest rate r 6) is relatively constant over time. 4. The capital and labor shares are roughly constant over time. The capital share a is the fraction of GDP that is devoted to interest payments on capital, 0: = g. The labor share 1 o: is the fraction of GDP that is devoted to the payments to labor inputs; i.e. to wages and salaries and wL other compensations: 1 o: = Y . Here to is the real wage. These stylized facts motivated the development of the neoclassical growth model, the Solow growth model, to be discussed below. The Solow model has spectacular success in explaining the stylized growth facts by Kaldor. Q9 Now consider the basic Solow model covered in class. Assume that Country A has a production function as, rem/E. Where A represents the technology available in the country and K the aggregate capital. Let the national saving rate be equal to 30%, s = 0.3. Also, assume that capital depreciates at a constant rate of 3%, 6 = 0.03