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What level of investment maximizes the steady state rate

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The steady state level of consumption in an economy (Css) is equal to steady state out- put (Yss) minus steady state depreciation. The latter is the depreciation rate (d) times the steady state capital stock (Kss). We assume here that there is no technological progress. Thus
Css = Yss - d Kss

What is the impact on steady state consumption of a small increase in the steady state capital stock? What level of investment maximizes the steady state rate of consumption?

Reference no: EM13887672

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