I have this assignment which asks the following:
"Compute the average capital-to-output ratio in Australia from 1960 to 2022. Explain how to compute the average ratio. (Hint: use the nominal GDP and the nominal gross fixed capital formation - New private business investment)
We have been given a capital income share constant of 0.3 and capital depreciation rate constant of 0.04.
I was originally going to calculate it using K/Y = (s / (g + δ)) , However, the hint of using the GFCF has thrown my thought train off. Is this the wrong formula?
The marking scheme also references the knowledge of the Steady State?
Any ideas to help put me back on track would help greatly.