Equilibrium value of output person-Solow growth model

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Reference no: EM13892096

The (steady state) equilibrium value of output per person in the Solow growth model (Chapter 5) is given by y∗ = A¯^3/2(s¯/d¯)^1/2 (1)

The equilibrium value of output per person in the production model (Chapter 4) is given by y∗ = A¯*(k¯)^1/3 (2)

a) In (2), y∗ depends on equilibrium capital per person (i.e. k∗). Is that true in (1) as well? (do not just say no because you do not see k∗ appearing in (1). Think ?rst).

b) Why do you think the technological parameter A¯ enters with a deferent exponent in the equations? Or equivalently, what is the deference in the two models that leads to this deferent result?

Reference no: EM13892096

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