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Macroeconomics 5th Edition by Olivier Blanchard
Edition 5ISBN: 978-0132159869Macroeconomics 5th Edition by Olivier Blanchard
Edition 5ISBN: 978-0132159869 Exercise 4
Deficits and the capital stock
For the production function,
gives the solution for the steady-state capital stock per worker.
a. Retrace the steps in the text that derive equation (11.8).
b. Suppose that the saving rate, s, is initially 15% per year, and the depreciation rate, , is 7.5%. What is the steadystate capital stock per worker What is steady-state output per worker
c. Suppose that there is a government deficit of 5% of GDP and that the government eliminates this deficit. Assume that private saving is unchanged so that total saving increases to 20%. What is the new steady-state capital stock per worker What is the new steady-state output per worker How does this compare to your answer to part (b)
For the production function,
gives the solution for the steady-state capital stock per worker.
a. Retrace the steps in the text that derive equation (11.8).
b. Suppose that the saving rate, s, is initially 15% per year, and the depreciation rate, , is 7.5%. What is the steadystate capital stock per worker What is steady-state output per worker
c. Suppose that there is a government deficit of 5% of GDP and that the government eliminates this deficit. Assume that private saving is unchanged so that total saving increases to 20%. What is the new steady-state capital stock per worker What is the new steady-state output per worker How does this compare to your answer to part (b)
Explanation
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(a) To begin the problem we can start wi...
Macroeconomics 5th Edition by Olivier Blanchard
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