Income disparity among countries and endogenous growth

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Macroeconomics. Chapter 8, Income Disparity Among Countries and Endogenous Growth.

In the Solow growth model, suppose that the per-worker production function is given by y=zk^0.3, with s=0.25, d=0.1, and n=0.02.

a) Suppose that in country A, z=1. Calculate per capita income and capital per worker.

b) Suppose that in country B, z=2. Calculate per capita income and capital per worker.

c) As measured by GDP per capita, how much richer is country B than country A? What does this tell us about the potential for differences in total pfactor productivity to explain differences in standards of living across countries?

Reference no: EM131169263

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