Reference no: EM13943025
A closed-form solution of the Ramsey model. (This follows Smith, 2006.) Consider the Ramsey model with Cobb-Douglas production, y(t) = k (t)a, and with the coefficient of relative risk aversion (?) and capital's share (a) assumed to be equal.
(a) What is k on the balanced growth path (k*)?
(b) What is c on the balanced growth path (c*)?
(c) Let z(t) denote the capital-output ratio, k (t)/y(t), and x (t) denote the consumption-capital ratio, c (t)/k(t). Find expressions for z?(t) and x?(t)/x (t) in terms of z, x, and the parameters of the model.
(d) Tentatively conjecture that x is constant along the saddle path. Given this conjecture:
(i) Find the path of z given its initial value, z(0).
(ii) Find the path of y given the initial value of k, k (0). Is the speed of convergence to the balanced growth path, d ln[y(t) - y*]/dt, constant as the economy moves along the saddle path?
(e) In the conjectured solution, are the equations of motion for c and k, (2.24) and (2.25), satisfied?
|
What will balance sheet look like after dividends are paid
: The balance sheet for Intranet Browser Corp. is shown here in market value terms. There are 7500 shares of stock outstanding. The company has declared a dividend of £1.10 per share. what is the stock selling for today? What will the balance sheet loo..
|
|
Is there a favorable balance between benefit and harm
: Write a potential hypothesis for this study and identify the variables (independent and dependent), Should the research study be stopped? Why or why not? Is there a favorable balance between benefit and harm
|
|
Preserve the verifiable integrity of digital evidence
: Explain the process used to preserve the verifiable integrity of digital evidence. How does this ensure that data is preserved unmodified? How can an analyst show that the original evidence is modified?
|
|
Contemplating opening her own custom saddle factory
: Lucy is contemplating opening her own custom saddle factory. She estimates that she can make 10 saddles per year and sell them for $15,000 each. The raw materials to make 10 saddles would cost $70,000. What is Lucy’s annual opportunity cost if she de..
|
|
Find the path of z given its initial value, z(0)
: Find the path of y given the initial value of k, k (0). Is the speed of convergence to the balanced growth path, d ln[y(t) - y*]/dt, constant as the economy moves along the saddle path?
|
|
Cash purchase and an equity-backed purchase
: Foxy News (currently trading at $50/share) is considering purchasing its rival Pulitzer Publications. Both firms currently have 1,000,000 shares outstanding and Pulitzer generates $1,500,000 in free cash flows each year. If Pulitzer's shareholders ar..
|
|
Explain the role of determining the speed of a computer
: § Convenience and quality of output are important. Explain what method of output would be best for each of the following situations and explain why
|
|
Liquidate a portion of his marketable securities portfolio
: Ralph, treasurer for M and M Products, Inc., recently updated his firm’s short-term cash forecast only to discover that the firm will suffer a cash shortage of $15 million for a period of 30 days. One alternative is to liquidate a portion of his mark..
|
|
What should you know about website privacy
: Deleting items never really gets rid of them. After reading this week's course materials, describe what Internet users should know about one of the following topics: What should you know about website privacy?
|