Question: please answer 3. Suppose that three countries have the same technology and follow the logic of the Solow growth model. If country 1 always saves
please answer

3. Suppose that three countries have the same technology and follow the logic of the Solow growth model. If country 1 always saves 10 percent of output (i.e s = .1), country 2 always saves 20 percent of output (i.e s = .2) and country 3 always saves 30 percent of output (Le s = .3) then what is GDP per capita in each country in steady state? What is the marginal product of capital in steady state in each country? Additional Assumptions: Y: = F(KtaLt) = (Ktl'3(Lt)'7s Kt+1 = Kt(1_ 5) + I: I; = SF(K,L), L+1 = Lt(1+ n) 6: .06,n =0 and s: .1,3 = 2,3 = .3 Hint: Find the capital-labor ratio k: that makes investment 6 = sF(k', 1) equal to depreciation die. It is easy to see that y = F(k, 1) = k'3 for the production function above
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
