Question: I am stuck on question D and E 0, BE (0,1) are parameters. Production is carried out by a single profit-maximizing firm renting at every

 I am stuck on question D and E 0, BE (0,1)

I am stuck on question D and E

are parameters. Production is carried out by a single profit-maximizing firm renting

0, BE (0,1) are parameters. Production is carried out by a single profit-maximizing firm renting at every time both physical capital and labour at the rental rates Wt Tti respectively. In equilibrium at time &, Wt = MPLt, It = MPK, where MPL, and MPK; denote the marginal product of labour and the marginal product of physical capital, motion equation: The change in the physical capital from time t to time t+1 is governed by the following law of Ke+1 - Ke = It - 8Kt where de (0,1) represents the physical capital depreciation rate parameter and I, denotes the aggregate investment in physical capital at time t which is equal in equilibrium to the aggregate saving S, which can be written as: St = aw Le + er.K where wtLt denotes the aggregate labour income, r,K, represents the aggregate capital income and a, E (0,1) are marginal propensity to save parameters. Aggregate consumption: Ct at time & is equal to the difference between aggregate output/income and aggregate saving: Ct = Yt - St Let ye denote the output/income per capita at time t: yt = N. Let ke stand for the physical capital per capita at time t K. =At = N. a. Write-down the production function in per capita units. (5 points) b. Show that both the aggregate labour income WL; and the aggregate physical capital income r, Kt are fractions of the aggregate income Yt. (10 points) C. Show that in equilibrium, the physical capital per capita at time t+1: kt+1 can be written as a function of its lagged value: kt. (5 points) d. Derive the steady-state physical capital per capita: k ss, the steady-state output/income per capita: yss, and the steady-state consumption per capita: Css. (15 points) e. Under the assumption that A = 10, B = ;, a = 0.1, & = ;, n = 0.02, 8 = 0.05, fill in the able below. (20 points)

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