ECON 4020 Final: Final4020_F2009.pdf
Document Summary
Part a: do all three problems below: the solow model [10 marks] The notation is standard and as usual we let lower-case variables denote per-e cient-worker units, so that y = y =(al), k = k=(al), etc. (a) show that there exists an intensive-form production function. That is, show that there exists a function, f, such that y = f (k) = f (k; 1). [4 marks] (b) firms choose k and l to maximize pro(cid:133)ts, (cid:25), given by (cid:25) = f (k; al) (cid:0) rk (cid:0) wal, where w is the wage rate and r is the real interest rate. Consider a ramsey model with a general neoclassical production function. We saw in class that the dynamics of consumption per e cient worker, c, are given by the so-called. Euler equation: (cid:15)c c r (cid:0) (cid:26) (cid:0) (cid:18)g (cid:18) where r is the real interest rate, and (cid:26), (cid:18), and g are all strictly positive exogenous parameters.
