Reference no: EM132406062
1. Consider two imaginary countries, Atlantis and Balagan. Atlantis' GDP per worker is 1.96 times that of Balagan. The ratio of physical investment to output is 0.35 in Atlantis, and in Balagan it is 0.25. Population and hence labour supply is constant over time in both countries. So is total factor productivity.
(a) Suppose output in each country i = A, B is produced according to
Yi(t) = ZiKθ i (t)L 1-θ i (t)
where Y is output, Z is total factor productivity, K is (physical) capital and L is labour. Meanwhile, capital is accumulated according to
K? i(t) = siYi(t) - δKi(t)
where an overdot represents a time derivative, i.e.
X? (t) := d/dtX(t).
(i) Output per worker (Y/L) in each country i will converge to a constant as t → ∞. Derive an expression for this constant in terms of Zi , si, δ and θ.
(ii) Suppose ZA = ZB. What must θ be in order for this model to fit the facts?
(iii) Suppose θ = 1/3. What must ZA/ZB be in order for the model to fit the facts?
|
Business leaders stress the benefits of globalization
: Advocates of globalization, including professional economists and con economic growth. According to them, one of he benefits of globalization
|
|
Discuss in the context of demand-supply analysis
: Discuss, in the context of demand-supply analysis, the essential implications of commuters' failure to take into account the social benefits associated with bus
|
|
Achieving the socially efficient use of bus services
: Explain a government policy that might be effective in achieving the socially efficient use of bus services.
|
|
What is meant by the term full employment
: What is meant by the term 'full employment' in the statement, "the budget stimulus rolled out thus far needs to be tripled if full employment is to be reached
|
|
Population and hence labour supply
: Population and hence labour supply is constant over time in both countries. So is total factor productivity.
|
|
Amount of income taxes owed
: When income is $15,000, the amount of income taxes owed is $2,000; when income increases to $20,000, the amount owed increases to $3,000.
|
|
Unrestricted international aid to help build a power plant
: Below is a list of policy proposals that have been advanced to help the economies of developing nations (not just the country of your choice in part one.)
|
|
Matter of fact-beware of the black swan
: Is it ever possible to know for sure that a particular outcome can never happen, that the chance of it occurring is 0 percent? In the 2007 best seller
|
|
Price per ticket quantity of tickets demanded
: When excess demand exists for tickets to a major sporting event or a? concert, profit opportunities exist for scalpers.
|