ECON 4020 Final: Final4010_S2008.pdf
Document Summary
Part a: do any three of the six problems below: the solow model [10 marks] The capital stock per e ective worker evolves over time according to (cid:15)k = sf (k) (cid:0) (n + g + (cid:14))k, where f0(k) > 0 and f00(k) < 0. Consider a poor economy, where k lies below k(cid:3). In this economy, will r be increasing or: the ramsey model [10 marks] Consider a ramsey model with a general neoclassical production function. It can be shown that the dynamics of consumption, c, are given by the so-called euler equation: (cid:15)c c f0(k) (cid:0) (cid:26) (cid:0) (cid:18)g (cid:18) where f0(k) is the real interest rate (assuming that capital depreciation is zero). The dy- namics of k are given by (cid:15)k = f (k) (cid:0) c (cid:0) (n + g)k. We assume that f0(k) > 0 and f 00(k) < 0.
