The two countries have the same levels of productivity

Reference no: EM13852888

Suppose that there are two countries, X and Y, that differ in their rates of investment andtheir population growth rates. In Country X, investment is 20% of GDP and the populationgrows at 0% per year. In Country Y, investment is 5% of GDP, and the population grows at 4%per year. The two countries have the same levels of productivity, A. In both countries, the rate ofdepreciation, δ, is 5%. Use the Solow model to calculate the ratio of their steady state levels of income per capita assuming that a = 1/3

Reference no: EM13852888

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