Based on article "Technology and economic growth: From Robert Solow to Paul Romer" by Rui Zhao, Solow mentioned technology (At) and capital per unit of effective labor (Kt) have a significant influence on a country's ability to “catch-up” or “converge” to a steady-state level (K*). Why did Solow model assume At as a black box in economics? Explain in brief.
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- Based on article "Technology and economic growth: From Robert Solow to Paul Romer" by Rui Zhao, Solow mentioned technology (At) and capital per unit of effective labor (Kt) have a significant influence on a country's ability to “catch-up” or “converge” to a steady-state level (K*). Using the central equation of the Solow model, discuss the influence of At and Kt on country's ability to grow and move to a steady-state level (K*).Based on article "Technology and economic growth: From Robert Solow to Paul Romer" by Rui Zhao, Romer has successfully opened the black box and explained how technology can be produced by an economy without having to rely on external (exogenous) technology. Using the central equations of the Romer’s model. discuss how technology (A)t can be produced by a country to stimulate economic growth?Based on article "Technology and economic growth: From Robert Solow to Paul Romer" by Rui Zhao, Romer has successfully opened the black box and explained how technology can be produced by an economy without having to rely on external (exogenous) technology. Using the central equations of the Romer’s model, technology (At) can grow to At + 1 due to efforts in R&D and technology spillover. Explain the role of three key sectors in the economy to drive technological-based economic growth.
- What are the two critical factors that Lucas (1988) utilised to explain how technology may grow forever to support the steady growth of GDP per capita? Provide a diagrammatic illustration of your answer with explanation in words, based on a hypothetical example.SOLOW’S MODEL Consider following information from China and New Zealand in table: China New Zealand Real per capita GDP growth, 2012-2019 (average %) 6.5% 1.6% Real GDP per capita, 2012 (in constant 2017 USD) 11,169 32,989 Real GDP per capita, 2019 (in constant 2017 USD) 16,655 45,555 Average savings rate, 2012-2019 (% of real GDP) 43.7% 21.4% Capital stock, 2019 (in millions of constant 2017 USD) 14,283,969 409,160 Population (in millions) 1,434 4.8 Population growth (in %) 0.5% 1% Capital depreciation rate (in %) 3% 3% Production function in both economies has following functional form: Yt = A* K1/3 * L2/3 Where Yt denotes aggregate GDP in period t, Kt is aggregate capital stock, Lt is employment (assumed equal for whole population) and A is total factor productivity. Using information provided in table, explain from SOLOW MODEL perspective what factors could explain differences in average GDP per capita…Based on article "Technology and economic growth: From Robert Solow to Paul Romer" by Rui Zhao, Solow mentioned, technology (At) and capital per unit of effective labor (Kt) have a significant influence on a country's ability to “catch-up” or “converge” to a steady-state level (K*). In brief define what it means by a steady-state level.
- You were discussing the growth models with your friend Gaston during spring break. He summarized that the basic difference between the Solow model and the Romer model is that the Solow model suffers from diminishing returns-each additional unit of capital has less benefit than the previous unit. The Romer model doesn't have the same problem as labor used to generate new ideas doesn't have diminishing returns. He hypothesizes that if you changed the law of motion to At+1 = At + zol1/2A; that now the Romer model has diminishing returns to labor and will reach a steady state where growth is zero. Is he right?The graph below shows the standard model for economic growth. Output per worker В A Capital per worker One curve represents New Zealand and the other Ghana. The country of Ghana is likely to be at point while New Zealand is likely to be at point The improvement in output per worker due to adopting new technology could be shown as Which of the following does the model above suggest? Oeconomic growth in New Zealand is higher than it is in Ghana Oit is possible for Ghana to experience relatively high growth rates compared to New Zealand OGhana is poor due to high rates of corruption and poor infrastructure Othe only way for Ghana to raise living standards is to adopt new technologyThe key distinction between the views of Thomas Malthus and Esther Boserup on the relation between population growth and technological innovation is:a) Malthus and Boserup both regard population growth as exogenous in driving innovation, but Boserup emphasizes the ‘passion between the sexes’, while Malthus emphasizes human ingenuity b) Malthus and Boserup both regard population growth as exogenous in driving innovation, but Malthus emphasizes the ‘passion between the sexes’, while Boserup emphasizes human ingenuity c) Malthus regards population growth as exogenously driving technological innovation, while Boserup regards population growth as an endogenous response to innovationd) Boserup regards population growth as exogenously driving technological innovation, while Malthus regards population growth as an endogenous response to innovation
- SOLOW'S MODEL Consider following information from China and New Zealand in table: China 6.5% Real per capita GDP growth, 2012-2019 (average %) Real GDP per capita, 2012 (in constant 2017 USD) Real GDP per capita, 2019 (in constant 2017 USD) Average savings rate, 2012-2019 (% of real GDP) Capital stock, 2019 (in millions of constant 2017 USD) Population (in millions) Population growth (in %) Capital depreciation rate (in %) 11,169 16,655 43.7% 14,283,969 1,434 0.5% 3.0% Production function in both economies has following functional form 1 2 Yt = AK³L³ New Zealand 1.6% 32,989 45,555 21.4% 409,160 4.8 1.0% 3.0% Where Yt denotes aggregate GDP in period t, Kt is aggregate capital stock, Lt is employment (assumed equal for whole population) and A is total factor productivity. 1. Find capital stock (k), output (y) and consumption (c) per capita in STATIONARY STATE. Assume that total factor productivity (A) remains fixed at its 2019 level for each country. 2. Find GOLD RULE levels of capital…Consider the Swan-Solow model of economic growth. [Hint: Question (e) below goes beyond the subject matter discussed in the lecture and requires you to think independently.] It has been argued that corruption affects economic growth (e.g. Mankiw/Taylor, 5th ed., pp. 479-480). Explain which of the curves in your diagram is most plausibly affected by a reduction in corruption in an economy, and what this effect would be.Consider the Swan-Solow model of economic growth. [Hint: Question (e) below goes beyond the subject matter discussed in the lecture and requires you to think independently.] e) It has been argued that corruption affects economic growth (e.g. Mankiw/Taylor, 5th ed., pp. 479-480). Explain which of the curves in your diagram is most plausibly affected by a reduction in corruption in an economy, and what this effect would be.f) Use your diagram to show how the effect that you have identified in part (e) affects the steady state in the model.
