Is the economy at the golden rule steady state

Reference no: EM13209410

In the United States, the capital share of GDP is 30%, output growth is 3%, the depreciation rate is 4% and the capital output ratio (K/Y) is 2.5. Assume the US economy is described by a Cobb-Douglas production function.

(a) In terms of s,n,g, and ? (though not necessarily all) what is the growth rate of output for this economy if it is described by the Solow model.

(b) Using the steady state condition, calculate output growth for this economy is the savings rate is 17.5%.

(d) Is the economy at the golden rule steady state?

Reference no: EM13209410

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