Consider the economy described by the production function Y = F (K, L x E) =...

Consider the economy described by the production function

Y = F (K, L x E) = K^α(LE)^1-α

(a) Derive per effective worker production function.

(b) Assume there is population growth rate, depreciation rate and technology growth rate.

-Write the law of motion of k.

-Tell how k* will be changed when population growth rate increases with graph.

k∗ =

y∗ =

c∗ =

(d) Calculate gold rule capital stock and output.

k^gold =

y^gold =

Saving rate which satisfy golden rule (s^gold) =

Solutions

Expert Solution

Rahul Sunny answered 9 months ago

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