Answer to Question #294441 in Macroeconomics for Bunny

Question #294441

Consider following information from the Solow model in a continuous time, 𝒚 = 𝟐𝒌


𝟐 − 𝟒𝒌,


𝒌̇ = 𝒔𝒇(𝒌) − (𝒈 + 𝒏 + 𝜹)𝒌, 𝒚 = 𝒄 + 𝒊, where 𝒌 =


𝑲


𝑨𝑳


, g-is growth of technology, n-is labor force


growth rate, and 𝜹- is rate of depreciation. Answer the following questions-


(i) What are the assumptions this production function violates? (1 Mark)


(ii) Find out the steady state and golden rule solution of 𝑘



, 𝑦



, 𝑐



? (2 Marks)


(iii) Find out the steady state and golden rule solution of per capita capital, output ratio and


consumption?

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