Question: Consider a version of the Solow model without population growth or technological progress. It rains so much in the country of Tropicana that capital equipment
Consider a version of the Solow model without population growth or technological progress. It rains so much in the country of Tropicana that capital equipment rusts out (depreciates) at a much faster rate than it does it in the country of Sahara. If the countries are otherwise identical (i.e. in terms of savings rates, population, etc), in which country will the Golden Rule level of capital per worker be higher? Illustrate graphically and use your graph to explain your reasoning.
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