Macroeconomics 12th Edition by Rudiger Dornbusch, Stanley Fischer ,Richard Startz

تمرين 8

Consider an economy whose production function is
with A = 4 K / N. Suppose that it has a saving rate of.1, a population growth rate of.02, and an average depreciation rate of.03 and that

a. Reduce the production function to the form y = ak. What is a
b. What are the growth rates of output and capital in this model
c. Interpret a. What are we really saying when we assume that the labor-augmenting technology, A , is proportional to the level of capital per worker
d. What makes this an endogenous growth model