Question: Need help to answer Problem 2, Question number 3, please see picture Problem 2 (Exogenous Growth Models) [ 35 marks ] Consider the following numerical

 Need help to answer Problem 2, Question number 3, please see

Need help to answer Problem 2, Question number 3, please see picture

picture Problem 2 (Exogenous Growth Models) [ 35 marks ] Consider the

Problem 2 (Exogenous Growth Models) [ 35 marks ] Consider the following numerical example using the Solow growth model. Suppose that F(K, N) - zKIN and d = 0.10, so = 0.2, n = 0.02, N = 100 and z = 1. Suppose K = 400 in period 0 and the unit period is one year. Suppose that the economy is initially in the steady state (at t=0) and in year one (t=1) saving rate increato 0.4 and stay there forever. hint: k'_ szf (k) + (1 - d) k 1 +n And Aggregate quantities are given by, eg. X = x * N where r = 4, where r is per-worker quantity 1. Find * the steady state per-capita capital stock, consumption per capita (c* ) and output per capita (y*) for time t = 0. 2. Determine the golden rule saving rate, s, capital per worker, ko, output per capita, yor, and consumption, co, for time t=0 3. Determine the aggregate quantities K, C and Y of the capital stock, consumption and output for years 1, 2 ,3, 4 and 5. Summarize your results using a table

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!