Question: 1. Consider the Romer model and note the equilibrium output (per capita) growth is x{- BL-(1-0)P,0}. max (a) Why, in economic terms, would the

1. Consider the Romer model and note the equilibrium output (per capita) growth is x{- BL-(1-0)P,0}. max (a) Why, in economic terms, would the output growth rate increase in (1-6), B, and L? (b) The Romer model is a microfounded model of endogenous growth. Explain why endo- genizing growth in the Romer model requires deviation from the assumption of perfect competition? 1 (c) Provide an empirical example that supports the importance of population growth for economic growth. (d) Why do Canada and the United States have similar growth despite very different pop- ulations? (e) Explain in words why the decentralized equilibrium in the Romer model is socially suboptimal.

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a Increase in 1 phiB and I In the given equation an increase in 1 phiB and I contributes to higher equilibrium output growth This can be explained as ... View full answer

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