According to the neoclassical modelof economic growth

Reference no: EM13716289

According to the neoclassical modelof economic growth with a Cobb-Douglas production function, the growth rate ofcapital per effective unit of labor is given byDk/k =ska -1- (d + n +g). For the US economy, s = 0.2, k/y = 2.5, δ= 0.04, α = 0.3, and the long-run real GDP growth is n +g = 0.03.Assume that the economy has reachedits steady state, Dk/k = 0.

1.What is the value of steady-state capital per EUL, k*?

2.If the savings rate drops to s = 0.15, what would be Dk/k this year?

3.If the savings is kept at s= 0.15for a long time, what would be the steady state value of k* under that situation???

Reference no: EM13716289

Questions Cloud

A firm has four different investment options : A firm has four different investment options. Option A will give the firm 10 million at the end of one year, 10 million at the end of two years, and 10 million at the end of three years. Option B will give the firm 5 million at the end of one ..

The quantity of teen labor demanded by employers : If the minimum wage is raised above the market rte for teenage labor, what will happen to the quantity of labor supplied by teens, the quantity of teen labor demanded by employers, and the number of teens unemployed.

Prepare an essay regarding the concept of maximization : Prepare an essay regarding the concept of maximization and the assumptions associated with the behavior of economic man. Prepare a two page (double-spaced) essay. Cite references to material that you use in preparing the essay.

Top 20 most admired companies : 4. In 2008, citing Goldman as one of the "Top 20 Most Admired Companies" in the United States, Fortune magazine characterized the ?rm's culture as "an impossi-ble-to-replicate mix of extreme aggression, deep paranoia, individual ambition, an..

According to the neoclassical modelof economic growth : According to the neoclassical modelof economic growth with a Cobb-Douglas production function, the growth rate ofcapital per effective unit of labor is given byDk/k =ska -1- (d + n +g). For the US economy, s = 0.2, k/y = 2.5, δ= 0.04, α = 0.3,..

Consider a small open economy that uses peso as a national : 7.Consider a small open economy that uses peso as a national currency and allows it to float against foreign currencies. Suppose that the price level includes the peso prices of domestic goods and the peso equivalent of the dollar prices of imp..

Interest rates are lower in japan than in europe : Because interest rates are lower in Japan than in Europe, the "carry trade" makes money by borrowing in Japan and lending in Euroland - as long as the yen does not strengthen against the Euro. Describe a scenario in which a positive feedback d..

Endogenous verses exogenous growth theories : In neoclassical growth models, the sources of growth, is exogenous usually "technology". Such theoretical models hence are able to describe how an economy grows, but not why it grows. To overcome this shortcoming, several growth models have bee..

5 page essay comparing theories from two economists : Assignment: 5 page essay comparing theories from two economists. "The Age of Turbulence" by Alan Greenberg was assigned reading and one other economist of my choice who has credible and thorough knowledge of any topic of my choosing that has..

User Account

All Pages