Consider a version of Solow's Model: Y = AKL-a SY K+1 K++8Kt Lt = Lo(1+n)t 1...

 

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Consider a version of Solow's Model: Y = AKL-a SY K+1 K++8Kt Lt = Lo(1+n)t 1 a) Rewrite the production function and the equation of capital accummulation using variables normalized by the units of labor, i.e. k = K/L; y = Y/L b) What are the values of k and y in a steady state? What are the growth rates of aggregate output and aggregate consumption? Consider this different version of Solow's Model: YAK (EL) 1-0 SY+K+1 K+ +8K+ Lt = Lo(1 + n)t Et = = Eo (1 + x)t c) Rewrite the production function and the equation of capital accummulation using variables normalized by the units of effective labor, i.e. k = K/(EL); y = Y/(EL). d) What are the values of k and y along a balanced growth path? What is the growth rate of aggregate output and aggregate consumption along this BGP? Consider a version of Solow's Model: Y = AKL-a SY K+1 K++8Kt Lt = Lo(1+n)t 1 a) Rewrite the production function and the equation of capital accummulation using variables normalized by the units of labor, i.e. k = K/L; y = Y/L b) What are the values of k and y in a steady state? What are the growth rates of aggregate output and aggregate consumption? Consider this different version of Solow's Model: YAK (EL) 1-0 SY+K+1 K+ +8K+ Lt = Lo(1 + n)t Et = = Eo (1 + x)t c) Rewrite the production function and the equation of capital accummulation using variables normalized by the units of effective labor, i.e. k = K/(EL); y = Y/(EL). d) What are the values of k and y along a balanced growth path? What is the growth rate of aggregate output and aggregate consumption along this BGP?

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a Normalizing by units of labor we have Production function y AKL Ak ... View the full answer