Consider the simple Romer model with the following values for parameters Z = 0.003 Y = 0.25

 Consider the simple Romer model with the following values for parameters 

 

Transcribed Image Text:

Z = 0.003 Y = 0.25 L = 900 Ao = 7 a) How fast are ideas growing in this economy in percentage terms? How many workers are being employed in the goods sector? b) Find what the stock of ideas in this economy will be in periods 200 (t = 200) and 400 (t = 400). c) Find an expression for the output per worker in the balanced growth path. What will be the standard of living in periods 200 and 400? d) On a clear graph, plot the trajectory of the log of output per worker through time. e) Now, assume the policy-maker decides to allow 100 extra workers to come from overseas, leading to an increase in the total labour force to 1,000. Show the effects of this change on the growth rate of ideas. Z = 0.003 Y = 0.25 L = 900 Ao = 7 a) How fast are ideas growing in this economy in percentage terms? How many workers are being employed in the goods sector? b) Find what the stock of ideas in this economy will be in periods 200 (t = 200) and 400 (t = 400). c) Find an expression for the output per worker in the balanced growth path. What will be the standard of living in periods 200 and 400? d) On a clear graph, plot the trajectory of the log of output per worker through time. e) Now, assume the policy-maker decides to allow 100 extra workers to come from overseas, leading to an increase in the total labour force to 1,000. Show the effects of this change on the growth rate of ideas. Z = 0.003 Y = 0.25 L = 900 Ao = 7 a) How fast are ideas growing in this economy in percentage terms? How many workers are being employed in the goods sector? b) Find what the stock of ideas in this economy will be in periods 200 (t = 200) and 400 (t = 400). c) Find an expression for the output per worker in the balanced growth path. What will be the standard of living in periods 200 and 400? d) On a clear graph, plot the trajectory of the log of output per worker through time. e) Now, assume the policy-maker decides to allow 100 extra workers to come from overseas, leading to an increase in the total labour force to 1,000. Show the effects of this change on the growth rate of ideas. Z = 0.003 Y = 0.25 L = 900 Ao = 7 a) How fast are ideas growing in this economy in percentage terms? How many workers are being employed in the goods sector? b) Find what the stock of ideas in this economy will be in periods 200 (t = 200) and 400 (t = 400). c) Find an expression for the output per worker in the balanced growth path. What will be the standard of living in periods 200 and 400? d) On a clear graph, plot the trajectory of the log of output per worker through time. e) Now, assume the policy-maker decides to allow 100 extra workers to come from overseas, leading to an increase in the total labour force to 1,000. Show the effects of this change on the growth rate of ideas.

Answer rating: 100% (QA)

Solution a The growth rate of ideas in this economy can be calculated using the equation g z y 1 0006 1 025 where g is the growth rate of ideas z is the rate of ... View the full answer