Derive the explicit-form solution

Reference no: EM131136029

Let us return to Example 6.4.

(a) Prove that the law of motion of capital stock given by (6.37) monotonically converges to a unique steady-state value of k∗ starting with any k0 > 0. What happens to the level of consumption along the transition path?

(b) Now suppose that instead of (6.37), you hypothesize that

Verify that the same steps lead to the conclusion that b = c = 0 and a = βa.

(c) Now let us characterize the explicit solution by guessing and verifying the form of the value function. In particular, make the following guess: V (x) = A log x, and using this form together with the first-order conditions, derive the explicit-form solution.

Reference no: EM131136029

Questions Cloud

Identifying customer values-increasing forecast accuracy : Which of the following is not a principle regarding the way lean systems function? (I) Identifying customer values (II) Focusing on processes that create value (III) Elimination of waste to create flow (IV) Increasing forecast accuracy (V) Producing ..

Determining system requirements and process modeling : Business process model is a high level view of the activities a business undertakes to produce a service or product. Business processes include actions by management, workers, machines, customers, vendors.

Which e-recruiting media and methods would you recommend : Specifically, which e-recruiting media and methods would you recommend, and why? How would you use these methods to market the job to potential candidates? How will you differentiate and position the job in the job market?

Answer the following question from case study : Voice Concepts is a new company that has been formed to market and sell the talking chip, or message maker.- Omega Products of America is a subsidiary of a Japanese manufacturer.

Derive the explicit-form solution : Now let us characterize the explicit solution by guessing and verifying the form of the value function. In particular, make the following guess: V (x) = A log x, and using this form together with the first-order conditions, derive the explicit-for..

Using self-selection segmenting strategy : Identify three different companies that you believe to be using a self-selection segmenting strategy. Describe their strategies and explain some of their similarities and differences. Also, explain which do you think would be more effective and why?

Explain a typical grievance procedure : Explain a typical grievance procedure. Elaborate on the advantages of a functional grievance procedure, including a non-union workplace.

Historically low approval ratings of congress : Addressing the historically low approval ratings of Congress in (see: http://www.gallup.com/poll/1600/congress-public.aspx) Then, several House Democrats staged a sit-in on the House floor to demand a vote on gun control legislation

Estimate gauge repeatability and reproducibility : In a study to isolate both gauge repeatability and gauge reproducibility, two operators use the same gauge to measure 10 parts three times each. The data are shown in Table 8E.8.

User Account

All Pages