Characterize the steady-state world equilibrium

Assignment Help Econometrics

Reference no: EM131135770

Consider the model in Section 18.4.2. Suppose that the world consists of two countries with constant and equal populations, and constant savings rates, s₁ > s₂. Suppose that the production function in each country is given by (18.15), with k' corresponding to the highest capital-labor ratio in any country experienced until then. There is no technological progress, and both countries start with the same capital-labor ratio.

(a) Characterize the steady-state world equilibrium (i.e., the steady-state capital-labor ratios in both countries).

(b) Characterize the output per capita dynamics in the two economies. How does an increase in γ affect these dynamics?

(c) Show that the implied income per capita differences (in steady state) between the two countries are increasing in γ. Interpret this result.

(d) Do you think this model provides a plausible mechanism for generating large income differences across countries? Substantiate your answer with theoretical or empirical arguments.

Reference no: EM131135770

Questions Cloud

The project manager of a project with the objective : Dana Lasket was the project manager of a project with the objective of determining the feasibility of moving a significant portion of Gerkin's computing capacity to another geographical location. Project completion was scheduled for 28 weeks. Dan..

The characteristics of invisible objects : Discuss the two lines of research examining infants' ability to reason about the characteristics of invisible objects.

Describe the different accounting ledgers used by construct : Describe the different accounting ledgers used by construction companies and explain their purpose.

A review of the international space station project : Imagine you are conducting a review of the International Space Station project. Research press coverage and the Internet to collect information on the current status of the project.

Characterize the steady-state world equilibrium : Do you think this model provides a plausible mechanism for generating large income differences across countries? Substantiate your answer with theoretical or empirical arguments.

Farm to fork on quality at darden restaurants : Darden Restaurants, the $5.2 billion owner of such popular brands as Olive Garden, Red Lobster, Seasons 52, and Bahama Breeze, serves more than 300 million meals annually in its 1,700 restaurants across the U.S. and Canada.

How many shells according its electron configuration : How many shells according its electron configuration? How many electrons in the last shell? How many neutrons in the nucleus? What is the Atomic Number of this element...?

Five different ways these two babies perceive the objects : A month-old infant and her 8-month-old cousin are sitting side-by-side watching their grandparents do laundry. - Discuss five differences in the ways these two babies perceive the objects they are viewing.

Formulate an integer linear program : East Coast Trucking provides service from Boston to Miami using regional offices located in Boston, New York, Philadelphia, Baltimore, Washington, Richmond, Raleigh, Florence, Savannah, Jacksonville, and Tampa. The number of miles between each of ..

User Account

All Pages