What is the long-run equilibrium level of capital

Reference no: EM13262704

Recall the Solow model economic production function,

Y = A * K^a * L^(1-a)

Assume the following initial conditions:
A = 1.8
a = 0.35
K = 11
L = 95
Additionally, you know that depreciation rate is 7 % and the savings rate is 8 %.

Assuming no changes in any of the parameters, besides the change in K over time, what is the long-run equilibrium level of capital?

Reference no: EM13262704

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