The golden rule is defined as the saving rate that maximizes consumption at the balanced growth...

The golden rule is defined as the saving rate that maximizes consumption at the balanced growth path. Where is the golden rule higher? (also graphically). Why are they different?

Expert Solution

Rahul Sunny answered 2 years ago

In order to maximize the steady state level of consumption per worker, the Golden Rule steady...

In order to maximize the steady state level of consumption per worker, the Golden Rule steady state capital stock per worker (k*gold) satisfies the condition that the marginal productivity of capital at the k*gold capital level equals the depreciation rate . Graphically illustrate how to find the k*gold. (20 points)

Use golden rule in the Solow growth framework to analyze the following three facts about the...

Use golden rule in the Solow growth framework to analyze the following three facts about the US economy, and discuss whether the US is over (or under) accumulating capital. The US capital stock is about 1.6 times of one year’s GDP; about 10% of GDP is used to replace depreciating capital; the return to capital is about 25% of US GDP.

Derivation of fermi golden rule?

Derivation clearly of fermi's golden rule ?

When reading a legal text, the first rule to apply is the: Literal Rule. Golden Rule....

When reading a legal text, the first rule to apply is the: Literal Rule. Golden Rule. Mischief Rule. Class Rule.

whyoptimal solution is better than the golden rule

why optimal solution is better than the golden rule

List pros and cons of the constant money growth rate rule.

Suppose that in the Solow growth model the saving rate is 30 percent (s=0.03), population growth...

Suppose that in the Solow growth model the saving rate is 30 percent (s=0.03), population growth rate is 2 percent (n=0.02), depreciation rate is 8 percent (d=0.08), and production fuction is F(K,N)=zK^0.4N^0.6. a) Suppose that z=2. What is the steady state level of captial per worker and consumption per worker? b) What is the level of golden rule savings and golden rule capital stock? At the golden rule capital stock, what is the level of consumption per worker? c) Suppose...

Define the following: 5. Golden rule level of capital 6. Natural rate of output 7. Steady...

Define the following: 5. Golden rule level of capital 6. Natural rate of output 7. Steady state 8. J-curve

Discuss the Solow Model. How does saving, consumption, production, income and population affect economic growth?

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