Explain the possible reasons of this evolution

Assignment Help Econometrics

Reference no: EM131209246

Consider the Solow growth model with Cobb-Douglas production function Y = z[K^αL^1-α], where Y is total output, z is total productivity, K is the total capital input, and L is the total labor input.

a. Show that in the competitive equilibrium, α is the fraction of national income that goes to the remuneration of capital and 1 - α is the fraction that goes to the remuneration of labor.

b. Use the (average) labor share in national income from your own country for the period 1990 to 2000 to find the value of α.

c. Use your answer to part b to calculate the ‘‘Solow residual'' z using the aggregate output, capital, and labor (Y, K, and L) from your country for each year in the period 1990 to 2000. How has this measure of total productivity evolved over time in your country? Is there a productivity slowdown? Explain the possible reasons of this evolution (inventions, government regulations, price of energy, etc.).

Reference no: EM131209246

Questions Cloud

Find an expression for the output per worker : Find an expression for the output per worker as a function of the capital-labor ratio.

What are the advantages of owning preferred stock : Define and contrast stocks and bonds. - What are the advantages of owning preferred stock?- What are the advantages of owning common stock?

Cantankerous and very stubborn : Your superior is a cantankerous and very stubborn man who believes that the simplest approaches are the best. Your firm has just bought a van, with a five-year lifetime, for $10000.

Identify connections and relationship of principles included : Analyze the codes of conduct of at least 3 major public U.S. companies. Include citations for each of these companies' codes of conduct. Identify connections and relationships of the principles included.

Explain the possible reasons of this evolution : Show that in the competitive equilibrium, α is the fraction of national income that goes to the remuneration of capital and 1 - α is the fraction that goes to the remuneration of labor.

Government security and a government agency security : What is the difference between a government security and a government agency security? - Which asset would you prefer to own if safety and liquidity were important to you?

How can socialization and mentoring be use to advance career : How can socialization and mentoring help minimize resistance to change using the contingency approach? How can socialization and mentoring help people embrace these changes as a part of career advancement?

Tax rate for the corporation : An average tennis racquet sells for $100 and costs $40 to make. The tax rate for the corporation is 40% and the discount rate is 10%. Is there an opportunity cost involved?

Would you rather own stocks or bonds of a corporation : Would you rather own the stocks or bonds of a particular corporation if you believed that the corporation was going to earn exceptional profits next year?

User Account

All Pages