(a) What is the steady-state value of the capital-labor ratio? ( b) What is the

Question

(a) What is the steady-state value of the capital-labor ratio?

(b) What is the steady-state value of output per worker?

(c) What is the steady-state value of consumption per worker?

A country has the per-worker production function yt = 5k .5t , where yt is output per worker and k t is the capital-labor ratio. The depreciation rate is 0.2 and the population growth rate is 0.05. The saving function is St = 0.2Yt , where St is total national saving and Yt is total output. (a) What is the steady-state value of the capital-labor ratio? (b) What is the steady-state value of output per worker? (c) What is the steady-state value of consumption per worker?

Explanation / Answer

(a) sf(k) = (n + d)k, so 0.2 x 5 k0.5 = 0.25k; or k0.5 = 4, so k = 16.
(b) y = 5 k0.5 = 20.
(c) c = (1 - s)y = 0.8y = 16.

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.