Consider two countries ‘Milkie’ and ‘Cookie’. The two countries have identical per capita production function, y = Ak^0.5 , with initially the same level of technology, A = 1. Also, assume that the saving rate is s = 0.2 for ‘Milkie’ and s = 0.3 for ‘Cookie’, respectively, while the two countries have identical population growth and depreciation rates both equal to 0.1.



(a) Which country has a higher steady state income per capita? Determine the steady state income per capita for each country. Which country has a higher steady state growth rate in per capita income? Why?

Guest Jun 19, 2017
social bar

1+0 Answers


Why is it urgent?

Is it perhaps because you are a rude and demanding person?

Melody  Jun 19, 2017

17 Online Users

We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. We also share information about your use of our site with our social media, advertising and analytics partners.  See details