Assume that the per-worker production function is yt = 5∙kt1/2. Further, assume that the saving rate,...

Assume that the per-worker production function is y_t = 5∙k_t^1/2. Further, assume that the saving rate, s = 0.2, the depreciation rate, ?=0.04, and the population growth rate, n= 0. Calculate the following:

The steady-state values of the capital-labor ratio, k* , output per worker, y*, investment and saving per worker, i* and s*, and , and consumption, c*.

Solutions

Expert Solution

Given the above details we know that at Steady state,

Following the above formulas we will find the value for k*, y*, c*, s* and i*

Therefore,

Rahul Sunny answered 1 year ago

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