suppose the parameters of the Romer model take the following values: Ade 100) 1/

Question

suppose the parameters of the Romer model take the following values: Ade 100) 1/3,000, and L 0:10:2401q niasd ymono39 ?6 92°qque 1,000 .(Notice that all the values are fixed amounts) What is the growth rate of output per person in this economyagns 135 0??b Vln9nsmeq after 50 years? change both algebraically and graphically respectively? 0 noiverisd arili wone () change both algebraically and graphically respectively? (10 Points) (tnioq or) s mld0 (1 12) What is the initial level of output per person? What is the level of output per persono (3) Consider a doubling of the research share (l), how would your answer to part (1) and (2) (4) Consider a doubling of the population (0), how would your answer tortan(2) n6

Explanation / Answer

Ans 1)

Groeth rate of output per person =l*z*L*100=0.1*(1/3000)*1000*100=0.1/3=0.033*100=3.3%

Ans 2)

Initial level of output per person=A0*(1-l)(1+g)^t=100*(0.9)(1+3.3%)^1=92.97

Aftwr 50 years

A0*(1-l)*(1+g)^50=100*(0.9)*(1.033)^50=456.3

Ans 3)

l=0.2

g=z*L*i=1/3000*0.2*1000=6.67%

Output per person=A0*(1-l)*(1+g)=100*0.8*(1.067)=85.46

After 50 years

A0*(1-l)*(1+g)^50=100*0.8*(1.067)^502047.91

ANs 4)

g=z*l*L=1/3000*0.1*2000*100=6.67%

Initila level of output=A0(1-l)(1+g)=100*(0.9)*(1.067)=96.03

After 50 years

100*(0.9)*(1.067)^50=2303.9

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