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33. Compare the impact of population growth rate on level of per capita income in the Solow growth model and Romer’s endogenous growth model with deliberate investment in R&D.
32. Briefly discuss how theories of expanding varieties, quality ladder, and technological transfer attempt to fill the gaps in the neoclassical growth model in addressing the three stylized facts?
31. The AK models are the first generation models in an attempt to endogenize technology. Why are they still categorized as neoclassical growth models? Whose works mainly constitute the AK models?
30. Suppose that in an economy, output per worker and capital per worker grew by 2.42%, and 2.48%, respectively. If the share of capital in output is 0.25:
(a) Calculate the total factor productivity.
(b) Is there a reason to believe that this economy is at steady state?
30. Suppose that in an economy, output per worker and capital per worker grew by 2.42%, and 2.48%, respectively. If the share of capital in output is 0.25:
(a) Calculate the total factor productivity.
(b) Is there a reason to believe that this economy is at steady state?
29. Assume that the production function can be given by Y = A of radical KL
where Y = output, L = labor, K = capital and the technology parameter A = 1. Assume further that the saving rate is 25%, labor force grows at a rate of 2%, and the depreciation rate is 5%.
(a) Determine:
i. The steady state level of per capita capital stock.
ii. The steady state level of per capita income.
iii. The steady state level of per capita consumption
(b) Is the steady state level of capital per worker the same as the \golden rule" level of capital?
29. Assume that the production function can be given by Y = ApKL where Y = output, L = labor, K = capital and the technology parameter A = 1. Assume further that the saving rate is 25%, labor force grows at a rate of 2%, and the depreciation rate is 5%.
(a) Determine:
i. The steady state level of per capita capital stock.
ii. The steady state level of per capita income.
iii. The steady state level of per capita consumption
(b) Is the steady state level of capital per worker the same as the golden rule" level of capital?
28. Consider the Solow model with technology. Suppose that saving rate increases from s to s'. Demonstrate using graphs and quantitative methods how this shock affects
(a) Level of per capita income.
(b) Growth rate in per capita income.
27. There are a number of stylized facts about growth.
(a) Write four of those stylized facts of growth.
(b) Discuss briefly how the Solow model (neoclassical growth model) addresses these stylized facts.
(c) What are the shortcomings of this model?
26. A country faced an unexpected build-up of foreign exchange earning following a positive price shock on the country’s main export in the international market. This gain was, however, accompanied by a soaring inflation. How and under what conditions, if any, can the build-up of the foreign exchange reserve trigger inflation?
