Question: In the two-sector endogenous growth model, the production function for manufactured goods is Y = F(K, (1 u)LE), and the production function has constant returns

 In the two-sector endogenous growth model, the production function for manufactured

In the two-sector endogenous growth model, the production function for manufactured goods is Y = F(K, (1 u)LE), and the production function has constant returns to scale. We obtain Y!(LE) = F(K!(LE), 1 1:). Using our standard notation of y as output per effective worker and k as capital per effective worker, we can express this as y = F (k, l a). The exogenous population growth rate is n. u denotes as the fraction of labor force in the universities. d. (6 points) Write down the equation of motion for k, which shows N; as saving minus break-even investment. What is the steady state condition? Use this equation to draw a graph showing the determination of steady-state k. (Him: This graph will look much like those we used to analyze the Solow model.) e. (6 points) In this economy, what is the steady-state growth rate of output per worker Y/L? How do the saving rate 5 and the fraction of the labor force in universities it affect this steady- state growth rate? f. (6 points) Graphically illustrate and explain the impact of an increase in u. (Hint: This change affects both curves.) Describe the steady-state effects

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