# Solow Modal Question!!!! Amit Sir & Duck plz have a look.... Classic List Threaded 14 messages Open this post in threaded view
|

## Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 Consider an economy with production function Y = K^α*T^β*(AL)^1−α−β where K, A, L are, as usual, capital, technological progress and labour and T is the stock of land. α, β > 0. A grows at rate g and L grows at rate n. The stock of land is ﬁxed though. Aggregate saving equals a fraction s of aggregate output. Assuming K depreciates at rate δ Derive the steady state growth rate of capital a)      K./K = (1-α-β)(g+n)/(1-β) b)      K./K = (1-α-β)(n)/(1-β) c)      K./K = (1-α-β)(g+n)/(1-α) d)      None of these Derive the condition when steady state growth rate of output per worker is positive. a)      (1-α-β)g > βn b)      (1-α-β)g < βn c)      (1-α-β)g = βn d)      None of these PLz help... M.A Economics Delhi School of Economics 2013-15 Email Id:sumit.sharmagi@gmail.com
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 Is it c? For the first part?
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 In reply to this post by Sumit Hi Devika, I don't have the answers. Could you share how you approach the question(Small hint will also work).... Also are you Mathematical getting option c) or Is this just a best guess???? M.A Economics Delhi School of Economics 2013-15 Email Id:sumit.sharmagi@gmail.com
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 Both actually. I solved for the steady state capital, but the expression wasn't really reliable. Also, total capital will grow at the rate of n+g. I should stop the guesswork x_x
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 In reply to this post by Sumit I THINK THE PRODUCTION FUNCTION SHOULD BE THIS  K^α*T^1−α−β *(AL)^B AND YOU WOULD GET THE SOLUTION FROM HERE,USING GROWTH EQUATION .GROWTH OF OUTPUT WILL BE B(N+G)/1-A WHERE B=BETA AND A=ALPHA
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 @pbansal- can u please show the steps? should we just use the basic identities - 1) k/f(k)=s/del(k) or 2) s[f(k)]=(del+n+A)k? Please tell how to solve these sums :'(
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 Yes using basic equation will do.u can express it in terms of growth rates and then proceed
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 @pbansal-can u please show it? thank you
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 In reply to this post by Sumit i) The question is correct. Answers are "C" and "A".  Just take the log and differentiate wrt to time. Further manipulations are easy and will lead the result.  Use A./A = g & L./L = n.  to find K./K only relation between Y./Y and K./K is to be found. which is easy. ii) For second part divide both sides by L to get Y/L on LHS. Again take log and use previous result to find the    answer.
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 SHASHANK CAN U EXPLAIN A LITTLE MORE.... IN first question i m geeting till Y./Y= A K./K+ (1-A-B)(g+n) also in second part y./y=A K./K+ (1-A-B)g + (-A-B)n where A=ALPHA B=BETA y=Y/L PLZ EXPLAIN WHAT 2 DO NEXT...??
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 In reply to this post by shanks SHASHANK CAN U EXPLAIN A LITTLE MORE.... IN first question i m geeting till Y./Y= A K./K+ (1-A-B)(g+n) also in second part y./y=A K./K+ (1-A-B)g + (-A-B)n where A=ALPHA B=BETA y=Y/L PLZ EXPLAIN WHAT 2 DO NEXT...??
Open this post in threaded view
|

## Re: Solow Modal Question!!!! Amit Sir & Duck plz have a look....

 hey sakshi! you are differentiating the equation with respect to what?