In: Economics
An economy has the following Cobb-Douglas production function:
Y = Ka(LE)1-a
The economy has a capital share of 1/3, a saving rate of 24 percent, a depreciation rate of 3 percent, a rate of population growth of 2 percent, and a rate of labor-augmenting technological change of 1 percent. It is in steady state.
a. What is the steady-state growth rate in total output?
b. What is the steady-state growth rate in output per worker?
c. What is the steady-state growth rate in output per effective worker?
d. Solve for capital per effective worker.
e. Solve for output per effective worker.
f. Solve for the marginal product of capital.