Question: Y; = HKfLi-a, (1) with constant labor, Lt : E. Assume that a constant fraction of output is used for investment, h=- (a (a) Using

Y; = HKfLi-a, (1) with constant labor, Lt : E. Assume that a constant fraction of output is used for investment, h=- (a (a) Using the capital accumulation equation, Kt+1 = Kt + It aKta (3) Kt 1K} Kt (b) Solve for the following derivatives. Determine if the derivative is positive or negative. Explain why the derivative is positive or negative. (Hint: how does the parameter affect how quickly capital grows?) Recall that 0 0. 39K}: 85 3911,: BL 395: 3d solve for the growth rate of capital, 91m =

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