Question: (b) In lecture, we assumed the following aggregate production function Y = AKa Hl-a (1) where Y is output, K is physical capital, H is

(b) In lecture, we assumed the following aggregate production function Y = AKa Hl-a (1) where Y is output, K is physical capital, H is human capital and a E (0, 1). GDP per capita can then be expressed as ac H 1-a N A (2) where N is population. Define lower case variables as x = X/N and show that the logarithm of the relative GDP per capita between any two countries c and c' can then be written as log(Ac) -log(Ac ) +a [log(kc) - log(kc' )] +(1-a) [log(hc) - log(hc)] (3)

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