 Solutions Part A - Growth Rates & Time to Double (Rule of 70) Part B - Returns to Scale - Constant or Not? Part C - Solow Growth Model - Solving for Steady State Part D - Plugging in Numbers Part E - Using the Solow Model and Diagram (c) See page 102, particularly page 105 (of Jones Macro Econ Crisis Update Ed) (d) is below The incantation of a steady state is the following: “A steady state is a value,  , such that  This implies that  " where (  ).Take the two equations above, and establish the steady state. Equation One – the Capital Accumulation Equation (aka, the Law of Motion of Capital)     , this is our equation (1)Equation Two – The production function    , this is our equation (2)Now – combine (1) & (2), and solve for Capital         You can see that the steady state level of capital (  ) depends on all the stuff in the right-hand-side: the savings rate. If   , the depreciation rate, If  (d) we are just plugging numbers in   (assuming I didn’t make a maths mistake along the way) |
Teaching - Curtis Kephart > Econ 100B Intermediate MacroEconomics (Homework and exam examples) >