Per-worker production and capital depreciates

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Reference no: EM131093166

Assume that a country's per-worker production is y = k1/2, where y is output per worker and k is capital per worker. Assume also that 10 percent of capital depreciates per year (δ = 0.10).

a) If the saving rate (s) is 0.4, what are capital per worker, production per worker, and consumption per worker in the steady state?

b) Solve for steady-state capital per worker, production per worker, and consumption per worker with s = 0.6.

c) Solve for steady-state capital per worker, production per worker, and consumption per worker with s = 0.8.

d) Is it possible to save too much? Why?

Reference no: EM131093166

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