![]() ![]() Assuming the economy was in steady state prior to the increase in labor force, k falls from k to some new level k1. ![]() An increase in the labor force.ģ The key to this question is to recognize that the initial effect of a sudden in- crease in the labor force is to reduce the capital-labor ratio since k K/L and K. Figure 3: Growth Rate of Output per Worker. The policy permanently reduces the level of output per worker, but the Growth rate per worker is only temporarily reduced and will return to g in the long run. The log of output per worker y evolves as in Figure 2, and the dynamics of. Assuming the economy began in steady state, the capital-technology ratio is now higher than is consistent with the reduced saving rate, so it declines gradually, as shown in Figure 1.Ģ Figure 1: A Decrease in the Investment Rate ~. A decrease in the investment rate causes the sy curve to shift down: at any given level of k, the investment-technology ratio is lower at the new rate of sav- ing/investment. Department of Economics Berkeley Berkeley, CA 94720-3880. Jones (with Chao Wei and Jesse Czelusta). 1 Solutions to Exercises in Introduction to Economic Growth (Second Edition). ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |