Consider the solow model with total factor productivity

Assignment Help Business Economics
Reference no: EM131005415

Consider the Solow model with total factor productivity At constantly growing at rate g>0.

a. Determine the a) instantaneous impact on GDP per capita, b) instantaneous impact on consumption per capita, c) long-run impact on GDP per capita (i.e. compare the level of GDP per capita with and without the parameter change, in the long-run), d) long-run impact on consumption per capita (i.e. compare the level of consumption per capita with and without the parameter change, in the long-run), and e) impact on long-run GDP per capita growth rate of a one-time and instantaneous increase (jump) in productivity At, through a significant and non-repeatable invention. Assume the country begins at its “steady state value” of k* before this event occurs. Justify your answer by use of graph and/or equation. [Hint: this should not be considered a change in g, since productivity resumes growth at rate g after the one-time jump; it should be modeled as a onetime jump in At.]

b. Graph the path of yt and ct against time (or better yet, ln(yt) and ln(ct), which will be linear) for the event analyzed in part a.

c. Repeat parts a&b for a permanent, instantaneous increase in the growth rate of productivity, g.

Please show graphs, model and detailed working

Reference no: EM131005415

Questions Cloud

Explorative data analysis for series and lead-lag estimation : Principles of Ito calculus and stochastic differential equations - introduction to the Black&Scholes model of option pricing.
Voluntary export restriction : Suppose Japan agreed to a Voluntary Export Restriction (VER) that reduced US imports of Japanese steel by 10%. Discuss what would be the likely short-run effects of that VER on the US and Japanese steel industries. If the restriction were permanent, ..
What is their mortality risk for radon-induced lung cancer : Consider people who receive an annual radon exposure (EEC basis) of 0.11 MBq h m-3 for the first 30 years of their lives. At age 30, through radon reduction remediation actions, they decrease their annual exposure to 0.02 MBq h m-3 for the remaind..
Utility function for an increase in her cash position : Jay Boville Corporation is being sued by Lark Dent. Lark Dent can settle out of court and win $40,000 or go to court. If Lark goes to court, there is a 30% chance that she will win the case. If she wins, a small and a large settlement are equally lik..
Consider the solow model with total factor productivity : Consider the Solow model with total factor productivity At constantly growing at rate g>0. Determine the a) instantaneous impact on GDP per capita, instantaneous impact on consumption per capita, long-run impact on GDP per capita (i.e. compare the le..
What is the annual radon exposure : An individual is exposed 75% of the time to radon with a physical concentration of 4.6 pCi/L and an equilibrium factor of F = 0.6. The remaining 25% of the time, the individual is exposed to radon at a concentration of 1.3 pCi/L and with an equili..
Winn uses straight line depreciation : Prepare the appropriate entries for Winn Heat Transfer from the inception of the lease through the end of 2011. Winn's fiscal year is the calendar year. Winn uses straight-line depreciation.
Affects demand for money : Which of the following affects demand for money?
Which of these is logically impossible : Which of these is logically impossible (when there are no liabilities): A) Large wealth but small money holdings B) Large wealth but small saving. C) Large saving but small money holdings. D) Large money holdings but small wealth. E) Large income but..

Reviews

Write a Review

 

Business Economics Questions & Answers

  What good or service does the firm sell

All firms can increase the volume of goods or services sold by cutting prices. But the volume (quantity) of goods or services a firm sells differs from a firm's revenues (price times quantity). Select your firm or a firm not previously discussed.

  The US nominal exchange rate declines

EXPLAIN IF POSSIBLE. What is happening to the US real exchange rate in each of the following situations? Explain. The US nominal exchange rate declines, and prices rise less in the US than abroad.

  Assuming that a merger faces some threats

Assuming that a merger faces some threats also that the industry decides on self-expansion as an alternative strategy.

  Discuss how changes in household disposable income-housing

Discuss how changes in household disposable income, housing and stock wealth, and debt-generated movements along and shifts in the U.S. saving function. Explain these effects, assuming other things were equal.

  Describe briefly one trade topic identified by the wto

Describe briefly one trade topic identified by the WTO on the website. And, what did you learn from the Web site about the WTO.

  The gross domestic product

The gross domestic product of countries Babistan, Turma, and Deru are $1,500, $2,500, and $3,500, respectively. There are 1,500 miles between country Babistan and countries Turma, and Deru. Does the gravity equation predict that there will be more tr..

  About the producer surplus

Producer surplus is the...

  Characterize the set of weakly dominated actions

Two firms, 1 and 2, simultaneously pick prices, p1 and p2, respectively, where p1,p2 ≥0. Both firms have constant (and identical) marginal costs, denoted c>0. Demand is given by D(p), where p is the lowest price, p = min {p1,p2}, If the two firms cha..

  Outline a training plan that will help employees

Taking a code of ethics "off the wall and into the hall" can be a particular challenge for medium to large firms with a diverse array of employees.

  Professional sports

Professional sports and big-league cities go hand in hand. Hosting a professional sports franchise is evidence that a city has arrived per-se – that is not simply a large city but a major league city. Moreover, acquiring or retaining professional spo..

  Q1 the demand for tobacco is price inelastic assume there

q1. the demand for tobacco is price inelastic. assume there is a drought that destroys a large portion of the tobacco

  Produces engines by teams of workers using assembly machines

Suppose you manage a plant that produces engines by teams of workers using assembly machines. The technology is summarized by the production function Q = 4KL where Q is the number of engines produced per week, K is the number of assembling machines, ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd