Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Question
Suppose you are a policy analyst at the World Bank tasked with advising policymakers in a developing country about how to achieve higher consumption levels in their economy. You use your knowledge of economic growth theory to calculate the savings rate that maximizes steady-state per capita consumption in the Solow growth model. Consider the standard Solow growth model. The production function is given, in each year ??, by: is also constant at ??. β, the share of labor in production, is greater than 0 and less than 1. Capital accumulation is described by: ????+1 =???? +???? -?????? Where ????+1 is the stock of aggregate capital in year ?? + 1, ???? is the stock of aggregate capital in year ??, ?? is the rate of capital depreciation, and ???? is the flow of new investments in the economy in year ??. The economy is closed and there is no public spending. The resource constraint of the economy is ???? +???? =???? Where ???? is aggregate consumption in year ??. Finally, the economy saves a constant share of output in every year, so that the savings rate is ??. Given the constant savings rate and the economy's resource constraint, in every year total investment is equal to total saving, according to the equation: 1-β β ??????,?? =????=?????? ?? () Where the number of workers in the labor force is constant at ??, and TFP (productivity) 1 ???? = ?????? Answer the following questions: A. Derive the steady state level of capital per capita, ??*. We now want to derive the level of capital per capita ??* and savings rate ?? that maximize consumption per capita in steady state, ??*. B. Derive an expression for the steady-state level of consumption per capita ??* in the Solow model as a function of the parameters of the model. C. Find the savings rate and the steady-state level of capital per capita (call this ??????????) that maximize the steady-state level of consumption per capita.
(Hint: take your expression in the previous part and maximize consumption per capita with respect to the savings rate). Is the "golden level" of capital per capita different from the one derived in part A? If so, why?
This document contains various important questions and their appropriate answers in the subject field of Economics.
Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.
Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..
Explain each of the following using supply and demand diagrams, With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.
The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.
Draw the production possibility curve and a. Define consumer surplus and producer surplus.
The Australian government administers two programs that affect the market for cigarettes
How many tickets to sell to maximize total welfare.
The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled
Depict the von Neumann-Morgenstern utility index u in a diagram
What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution
Calculate gross national product and net national product
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd