The impact of a capital shock on Solow Model using a Cobb Douglas Production Function.

Suppose we have an economy described by the Solow growth model, with Cobb-Douglas production function (Y=F(K,AL) = K^α (AL)^1-α ), a capital share of 0.5; with population, labor-augmenting productivity growth, and depreciation rates given by n = 0.01 per year, x = 0.02 per year, and depreciation = 0.045 per year; and with a saving rate s = 0.225 of output Y per year. Suppose that the economy is initially on its balanced growth path, but that a major disruption to the economy suddenly destroys 75% of its capital stock. i) How long before output per worker exceeds output per worker on the eve of the disruption ii) How long before output per worker returns to within 10% of it... click for more

Cobb-Douglas

Suppose we have an economy described by the Solow growth model, with a Cobb-Douglas production function (Y=F(K,AL) = K^α(AL)^1-α ), a capital share of 0.5; with population, labor-augmenting productivity growth, and depreciation rates given by n =0.01 per year, x = 0.02 per year, and depreciation = 0.045 per year; and with a savings rate s = 0.225 of output Y per year. Suppose that x suddenly and permanently falls from 2% per year to 0% per year. i) Calculate the paths over time after the slowdown of k, the ratio of capital to effective labor, of y, the ratio of output to effective labor, of K/Y, the capital-output ratio, and of Y/L, output per worker. ii) How do these... click for more

Understanding the Ramsey model.

When it comes to the Ramsey model, in particular when it is on its balanced time path, what contributions do the following have towards keeping it there? a) technology b) consumption c) Household preferences are straightforward affected by savings and consumption, but what of indirect factors such as technology? How does that work?

A list of definitions relating to classical macroeconomic theory.

What are the terms that are essential for understanding basic macroeconomics?

Writting about the State of the U.S. Economy

The problem is that I have the assignment sheet but I need someone to explain what I should do. What information I need to gather and what to do with it after I have gathered it. How do I go about explaining the state of the U.S. economy? I am including the assignment sheet so you may better help me. I do not need you to do the research for me but I do need a little more guidance than the assignment sheet. I have also gathered the L. A. times business section from January through March. Thank you.