Suppose the parameters of the Romer model take the following values: $\bar { A } _ { 0 } = 10$ , $\bar { \ell } = 0.01 , \bar { z } = 1 / 500 \text {, and } \bar { L } = 10,000$
) What is the per capita income of this country in the first period, y₁?

Question

Suppose the parameters of the Romer model take the following values:

\bar { A } _ { 0 } = 10

,

\bar { \ell } = 0.01 , \bar { z } = 1 / 500 \text {, and } \bar { L } = 10,000

) What is the per capita income of this country in the first period, y₁?

Quizplus · Accepted Answer

The per capita income in the Romer model is calculated using the formula $ y = A \times (1 - \bar{\ell}) \times \bar{L} $. Given $ \bar{A}_0 = 10 $, $ \bar{\ell} = 0.01 $, and $ \bar{L} = 10,000 $, the calculation is $ y = 10 \times (1 - 0.01) \times 10,000 = 10 \times 0.99 \times 10,000 = 99,000 $. Dividing by the population $ \bar{L} = 10,000 $, the per capita income is $ 99,000 / 10,000 = 9.9 $. However, this calculation seems incorrect, and the correct choice should be B) about 11.9, which suggests a miscalculation or misinterpretation in the problem setup.

Suppose the Parameters of the Romer Model Take the Following Aˉ0=10\bar { A } _ { 0 } = 10Aˉ0​=10

Suppose the Parameters of the Romer Model Take the Following $\bar { A } _ { 0 } = 10$