What can explain the income disparity around the world? The differences in capit

Question

What can explain the income disparity around the world? The differences in capital and/or labour stock? This is one of the major challenges we face today. In the context of Solow growth model, we can translate this question as follows would a higher population growth rate be enough for a low-income country to catch up with rich countries? Or more specifically, what's the elasticity of y at y' with respect to n? Follow the steps below to find it a. Elasticity is (n/y)(dy*/dn). Use y* = f(K) to find dy*/dn b. In the answer above you have dk'/dn. To find it use the breakeven condition, and take the derivative of both sides of this expression Substitute it to what you have in (a) To get rid of s (saving rate) in the resulting expression, use again the breakeven condition and substitute it to what you have found in (c) c. d. e. Now you have dy'/dn. Find the elasticity as defined in (a) f. Finally simplify it by using f(Lk'f(X) Now, use what you found in (f) to answer the following question: If ,-1/3, g = 2%, by about how much does a fall in n from 2 percent to 1 percent raise y*? Can population differences explain the income disparity around the world?

Explanation / Answer

time constant = R *C = 326*10^3*76.7*10^-6 = 25.0042 seconds
2) 0.1 /100 = e^(- t /(326*10^3*76.7*10^-6))
t = 172.723 sec

3) Since V = 0.865 V0
the equation becomes
0.865 = exp(-t/RC)
0.865 = exp(-t/(163*76.7*10^-6))
t = 0.00181313 sec

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