Is the income consistent with your predictions

Reference no: EM13191276

In the early 1980s, Brazil and South Korea had similar saving rates ( around 17%) and similar levels of income per capita ( around $6,000 in 1996 dollars). In the 1980-2000 periods, the average Brazilian saving rate stayed around 17%, whereas the Korean saving rate increased to more than 30%.
A. Use the Solow model to predict the effects on the steady-state income per capita for both countries (assuming their efficiency gains were exactly the same) and compare.
B. In 2000, income per capita was $7,190 in Brazil and $15,876 in Korea. Is this consistent with your predictions?

Reference no: EM13191276

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