Consider the textbook version of the Romer-Solow model, i.e. the Romer model that includes the Solow's...
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Consider the textbook version of the Romer-Solow model, i.e. the Romer model that includes the Solow's capital accumulation equation (more details can be found in Section 6.9 of the Jones textbook). Suppose there is an increase in the share of workers in the research sector, ī. 1. How is the balance growth path of output per capita affected? (Hint: level vs slope effect) 2. Graphically illustrate and explain the transition dynamics of output per capita towards the new BGP. What is the role of capital accumulation in your reasoning? (Hint: think about the dynamics of the growth rate and the convergence principle) Consider the textbook version of the Romer-Solow model, i.e. the Romer model that includes the Solow's capital accumulation equation (more details can be found in Section 6.9 of the Jones textbook). Suppose there is an increase in the share of workers in the research sector, ī. 1. How is the balance growth path of output per capita affected? (Hint: level vs slope effect) 2. Graphically illustrate and explain the transition dynamics of output per capita towards the new BGP. What is the role of capital accumulation in your reasoning? (Hint: think about the dynamics of the growth rate and the convergence principle)
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Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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