Consider the Solow growth model in which population evolves according

to: N = (1 + n)N where N is the population (labor force) in the current period, N

is the population (labor force) in the future period, and n is the population growth

rate. There are public health expenditures that takes the form of government spending,

G = gN, where G is the current period government spending on health care, g is the

per-capita health spending in the current period. The production technology is given

by Y = zKN1 where Y is the output of the consumption good, z is the total factor

productivity, K is the current period capital stock, aN is the labour input, and 0 < < 1

is a parameter. Consumers save a constant fraction, s, of their disposable income, where

0 < s < 1.

(a) Suppose that the economic is hit by a pandemic (e.g. Covid-19). The government

responds to the pandemic by raising the public health spending per person (e.g

spending on vaccination) temporarily (i.e. one-period only). Using the Solow growth

model, assess the impact of the pandemic.