The Solow model and income disparities. The following average values have been observed for the US economy over the past decades. An investment/output ratio Sh=0.21, a yearly population growth rate n=0.009, and average years of educational attainment relative to education time Sh=11.9/20. For 1990, an index of output per capita for the US has been calculated as y=1.0. For India, the same variables have been observed with the following values: Sk=0.14, n=0.021, Sh=5.1/20.0 and y=0.09.

a)      Assume the economies are at their steady-state and have the same depreciation rate x and Cobb-Douglas production function with capital share a=1/3. Evaluate the fit of the Solow model to explain observed income differences between the US and India. How much of the disparities must be attributed to differences in technology? What is the role of population growth?

b)      Answer the same question using the extended model with human capital. Assume that the share of humean capital in output is b=0.28.

Compare your answers to b) and c) and explain. 

The Solow model and income disparities. The following average values have been observed for the US economy over the past decades. An investment/output ratio Sh=0.21, a yearly population growth rate n=0.009, and average years of educational attainment relative to education time Sh=11.9/20. For 1990, an index of output per capita for the US has been calculated as y=1.0. For India, the same variables have been observed with the following values: Sk=0.14, n=0.021, Sh=5.1/20.0 and y=0.09.

a)      Assume the economies are at their steady-state and have the same depreciation rate x and Cobb-Douglas production function with capital share a=1/3. Evaluate the fit of the Solow model to explain observed income differences between the US and India. How much of the disparities must be attributed to differences in technology? What is the role of population growth?

b)      Answer the same question using the extended model with human capital. Assume that the share of humean capital in output is b=0.28.

Compare your answers to b) and c) and explain. 

 

我们的作业，拿不准，感觉题里的条件不够。高人帮忙呀，明天就要交了，汗

[此贴子已经被作者于2007-10-21 13:11:03编辑过]