Question: Can someone help me with 2A and 2B II. Predicting the Output Gap using a Solow Growth Model Augmented with Human Capital (35 Points) Let
Can someone help me with 2A and 2B

II. Predicting the Output Gap using a Solow Growth Model Augmented with Human Capital (35 Points) Let us consider a Solow growth model in which the aggregate output/income at time tfor country / : Yt' is described by the following aggregate production function: Yi = ( Ki ) ' - (hill ) B where K; is the aggregate physical capital in country / , h' is the human capital per capita in country /, Lt is the aggregate population size in country / and B' E (0,1) is the labour share of output parameter in country /. The equilibrium law of motions of the physical capita per capita: k; from time t to time t+1 in country / is governed by the following equation: kit - ki = Y'yE - (n' + 8 ) k; 1 + ni where yt is the output per capita in country i, n' E (-1, too) represents the growth rate parameter of the population in country i, y' E (0,1) denotes the investment rate parameter in country / and S' E (0,1) is the depreciation rate parameter in country /. a. Write-down the production function in per capita units for country /. (5 points) b. Derive the steady-state income per capita formula for country / and the steady-state income per capita gap formula between country / and country j. (10 points)
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