Find the steady-state capital stock per worker

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Reference no: EM131118820

1) Consider an economy described by the production function: Y = F (K, L ) = K1/2L1/2 where the depreciation rate is δ and the population growth rate is n.

a) Find the per worker production function.

b) Find the steady-state capital stock per worker as a function of the savings (s), depreciation rate (δ) and population growth rate (n)

c) Now assume the depreciation rate is 4% a year, population growth (n) is 2% a year and the savings rate is 24%. Find the steady-state level of capital per worker and the corresponding levels of output per worker and consumption per worker.

d) If the populating growth rate were to increase what would happen to total output (Y) in the steady state? How about output per worker (y) in the steady state?

Reference no: EM131118820

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