I have the following task:
At some moment of time (1953), the government of a country (Israel) signs an agreement with another country (West Germany) stipulating that West Germany would pay reparations to Israel during the following N years. For simplicity assume that N is large enough, that the amount or reparations is proportional to Israeli output, and that the economy of Israel reaches the new steady state while the reparations are stil paid.
Need to use Solow model. But I really do not understand what the change will happen. Probably it is the same as an increase in s. Help is needed.