Define a competitive equilibrium

Assignment Help Econometrics

Reference no: EM131139175

Consider a variant of the model studied in Section 11.3 in which the technology in the consumption good sector is still given by (11.27), while the technology in the investment good sector is modified to

where β ∈ (α, 1). The labor market clearing condition now requires LC(t) + LI (t) ≤ L(t). The rest of the environment is unchanged.

(a) Define a competitive equilibrium.

(b) Characterize the steady-state equilibrium, and show that it does not involve sustained growth.

(d) Analyze the steady-state income differences between two economies taxing capital at the rates τ and τ . What are the roles of the parameters α and β in determining these relative differences? Why do the implied magnitudes differ from those in the one-sector neoclassical growth model?

Reference no: EM131139175

Questions Cloud

What are the sources of value-added and non-value-added work : What are the sources of value-added and non-value-added work in this process? Where are the main opportunities to improve the cycle time of this process, with respect to both actual time used and the potential best times? What strategy would you u..

Do you find this prediction to be plausible : Show that the rate of population growth has no effect on the equilibrium growth rate of the economies studied in Sections 11.1 and 11.2. Explain why. Do you find this prediction to be plausible?

Find all local maxima and minima of f : Determine where f is increasing and where f is decreasing. Find all local maxima and minima of f. Determine where f is concave up and where f is concave down

Analyze changes in us gdp and savings : How do you analyze the last 10 years of changes in U.S. GDP, savings, investment, real interest rate and unemployment.

Define a competitive equilibrium : Analyze the steady-state income differences between two economies taxing capital at the rates τ and τ . What are the roles of the parameters α and β in determining these relative differences? Why do the implied magnitudes differ from those in the ..

Which expressions shows the investment saving equality : The total value of saving in the economy must equal the total value of investment. - which one of the following expressions shows the investment-saving equality?

Formulate the dynamic optimization problem : Formulate the dynamic optimization problem of a representative household, and show that any interior solution to this problem violates the transversality condition. Interpret this result.

What are the major changes that occur during adolescence : Describe what infants are like who have a secure attachment to their caregiver (parent). What role does that parent play in promoting that type of attachment, according to John Bowlby? Which parenting style leads to a child's having a positive s..

What were the solutions used to address the problem : What were the solutions used to address the problem? Was the case you described a special-cause or common-cause? Do you feel the solution or approach used appropriate for the cause?

User Account

All Pages