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Economy wants to satisfy the golden rule

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Reference no: EM131692396

1. The production function for the economy is y=2k?, the rate of depreciation (δ) is .08, population growth is .02 and there is no technological change.

a. Suppose the economy wants to satisfy the Golden Rule (i.e., maximize per capita consumption (c)), derive the saving rate that would achieve this.

b. At this saving rate, what are the steady state values of y, k, and c using the Solow model?

Reference no: EM131692396

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