Economy production is characterized by neoclassical function

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In an economy production is characterized by the neoclassical function =K.5N.5. Suppose it has a saving rate of .1, a population growth rate of .02, and an average depreciation rate of .03.

a. Write this production function in per capita form and find the steady-state values of k and y.

b. At the steady-state value of k, is there more or less capital than at the golden-rule level?

c. Determine what saving rate would yield the golden-rule level of capital in this model.

d. In the context of this neoclassical growth model, can a country have too much saving?

Reference no: EM131001257

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