Question 4 part a and b

QUESTION-4: [6 Marks each = 12] Country 1997 SK n A1990 U.S.A. 1.000 0.204 11.9 0.01 1.000 Canada 0.864 0.246 11.4 0.012 0.972 Cameroon 0.048 0.102 3.4 0.028 0.234 Assume that g + d = 0.075, a =1/3 and w = 0.10 for all countries. Using K hA "A" hat refers to a variable relative to its U.S, value e.g. 31997 for Canada is (0.864/1.000 = 0.864)] where h = e"" and x = n + g + d], estimate the steady-state incomes () ) of the above economies, relative to the United States. Consider two extreme cases: (a) the 1990 TFP ratios are maintained i.e. A19go . (b) the TFP levels converge completely. For each case, which economy will grow fastest in the next decade and which slowest? Why? Ask Expert