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, where ( Take the two equations above, and establish the steady state. Equation One – the Capital Accumulation Equation (aka, the Law of Motion of Capital) Equation Two – The production function Now – combine (1) & (2), and solve for Capital You can see that the steady state level of capital ( (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) >