(a) According to the standard Solow model without any technological progress, what is the fundamental reason...

 

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(a) According to the standard Solow model without any technological progress, what is the fundamental reason that the economy converges to a steady state with no per capita out- put growth? In the context of the standard Solow model, explain fully what "absolute convergence" means. Then, discuss the major problems with this approach, i.e. whether this approach is able explain what has been observed in the world in the last 40 or so years, in terms of poor versus rich countries. (b) Explain fully what "conditional convergence" means. How do you suppose the concept of conditional convergence is "better" at explaining the real world data than concept of absolute convergence? (a) According to the standard Solow model without any technological progress, what is the fundamental reason that the economy converges to a steady state with no per capita out- put growth? In the context of the standard Solow model, explain fully what "absolute convergence" means. Then, discuss the major problems with this approach, i.e. whether this approach is able explain what has been observed in the world in the last 40 or so years, in terms of poor versus rich countries. (b) Explain fully what "conditional convergence" means. How do you suppose the concept of conditional convergence is "better" at explaining the real world data than concept of absolute convergence?

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a The fundamental reason that the economy conver ges to a steady state with no per capita output growth in the standard slow model without any technol... View the full answer