Comparative statics (the Solow model without technology) d. Provide a diagram showing the time paths to...
Comparative statics (the Solow model without technology)
d. Provide a diagram showing the time paths to describe transition dynamics for the output per worker.
e. Now suppose that rather than a fall in the saving rate, there is a permanent fall in population growth from ? to ?′. Show in a diagram what the Solow model predicts will happen in this economy in the long run (at steady state) to capital per worker, output per worker, consumption per worker and the growth of total capital and output.
f. Describe all the adjustments in the previous part in words.
g. Assume the following parameter values: ?=0.6, ?=0.05, ?=0.03, ?=0.02 ??? ?′=0.01. Calculate the steady state values of output per worker and capital per worker before and after the change in population growth.
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Comparative statics (the Solow model without technology)
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