Consider an economy whose production function is Y(t) = K(t)ª, K(t) = sY(t) — 8K (t) (Notice there is a dot above the K). Show that if there are increasing marginal returns, that is a>1, then there are two possible futures for the economy depending on whether the initial capital K(0) is greater or less than a threshold. Estimate the value of that threshold.

Consider an economy whose production function is Y(t) = K(t)ª, K(t) = sY(t) — 8K (t) (Notice there is a dot above the K). Show that if there are increasing marginal returns, that is a>1, then there are two possible futures for the economy depending on whether the initial capital K(0) is greater or less than a threshold. Estimate the value of that threshold.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter21: Costs And The Supply Of Goods

Section: Chapter Questions

Problem 13CQ

See similar textbooks

Similar questions

The Great Financial Crisis (GFC) mainly hit financing and hence theability of companies to finance investment, while the Corona crisis haspredominantly hit the labour input via the lockdown.! Calculate the impact of both crises on long-run growth assuming that thelabour share is 0.7 and the following information are given:– GFC: Growth rate of labour = 0%, Growth rate of capital= -5%, Growth rate of TFP =1%– Corona Crisis: Growth rate of labour = -5%, Growth rate of capital = 0%, Growth rateof TFP = 1%! Discuss whether and under what circumstances the lockdown will lead toa lower potential output in the long-run.! In the light of the growth accounting insights, what policies would yourecommend to revive growth after the lockdown?
What does a positive NPW mean?
If the steady-state capital stock is currently below the golden rule level, this means that the marginal product of capital is too. and the saving rate should be Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a b C d high; raised high; lowered low; raised low; lowered
2) Consider an economy with depreciation 6=.2, saving rate s = .1. Worker productivity grows at rate g = .1. The economy starts with 5 units of capital per worker. The productivity function is given by: 2tnioq S) m6x9 grit no bazzim 23 0 2 2 19 0 f(k) = 3* k1/3 (1916978 zi 19verlɔirlw how to two lapiolandotdwong noitsluqoq TUOHTIW lebom wolo2011 ( The Marginal Product of capital is therefore 100037950 1 ritwong ytivitoub 1910 190 stign .6 MPK = 3* know 19q gniv brs (19) a. Using the above parameters, what is the golden rule steady state capital per (effective) worker? Please show your work below.
A CES production function with physical and human capital Consider the CES production function in terms of physical capital, K, and human capital, H: where 0 a. Set up the Hamiltonian and find the first-order conditions. b. What is the optimal relation between K and H? Substitute this relation into the given production function to get a relation between Y and K. What does this “reduced-form” production function look like? c. What is the steady-state value of the ratio of physical to human capital, (K/H)∗? d. Describe the behavior of the economy over time if the initial condition is such that K(0)/H(0)? e. Suppose that the inequality restrictions IK ≥ 0 and IH ≥ 0 apply. How do these constraints affect the dynamics if the economy begins with K(0)/H(0)∗?
ở Quiz 2- (15%)-(Unit 6 and 7) (page 15 of 30) - Google Chrome A 2021.tle.courses.open.uwi.edu/mod/quiz/attempt.php?attempt=53700&cmid%=D40672&page=14 The Learning Exchange 2021 ECON2003 - Intermediate Macro Economics || | S2 21/22 Quiz navigation Time left 0:54:27 |1 || 2 || 3I 4 || 5 ||6 78 Question 15 When is a country said to move into a recession? Not yet 9 10 11 12 13 14 15 16 answered a. If actual output falls below the potential level of output. 17 18 19 20 21 22 23 24 Marked out of O b. If actual output falls. 0.50 25 26 27 28 29 30 O. If actual output falls for two consecutive quarters of a year. - Remove fiag O d. If actual output falls below the trend level of output. Finish attempt . Previous page Next page Reset user tour on this page 11:20 am P Type here to search 28°C 20/04/2022 近
Hello I need help to find the answer for my econ 101 hw for a question as follows: Assume that the production function for a country is given by ?=√K and annual investment is given by the function ?=?×? where γ=0.270, and that the yearly depreciation rate is 4.50%. Suppose that this year, the output in the country is 1, and a neighbor country's output is 50% higher. Calculate the time it would take for the country's output to catch up with its neighbor's output. Assume the neighbor country's economy is neither growing nor shrinking. I will be also attaching the original problem for your reference as I just need to find the time that it would take the country's output to catch up with its neighbor's output. Thank You and please refer to the image to further assist with the question that I want answered.
The steady occurs when the economy is in equilibrium. Specifically, the steady state refers to the situation where K/N and Y/N are constant. K/N will not change when investment per worker equals depreciation per worker. During the adjustment process, the growth rates of Y, Y/N, and K/N will all be negative. Once the steady state is reached, these variables are constant and the growth rates will be zero. True False
Economics, physical capital represents the uildings or machines used by a business to produce product. The marginal product of physical capital presents the rate of change of output product with spect to physical capital (informally, if you increase e size of your factory a little, how much more Foduct can you create?). articular model tells us that the output product Y is given, a function of capital K, by Y = AKªL'-a ere A is a constant, L is units of labor (assumed to be stant), and a is a constant between 0 and 1. Determine marginal product of physical capital predicted by this del. ned with CamScanner
Assume a production function with constant returns to scale. Labour's share of income is 4/5 and capital's share is 1/5. If labour grows at 3%, capital ot 2%, and the rate of technological advance is 1.2%, roughly how many years would it take to double the current level of output? Multiple Choice 12 18 23 35 48
Consider the Ramsey-Cass-Koopmans neoclassical growth model with log utility, Cobb-Douglas production function, and 100% depreciation: Choose {c, ,k1,t > 0} to maximize EB' Inc, 't+1 t=0 subject to C, +k,1 = Ak“ , t20 ko given. 0
Why can the Sunk costs-past costs not be changed by any future investment?