Skip to main content

Questions tagged [balanced-growth]

The tag has no usage guidance.

Filter by
Sorted by
Tagged with
0 votes
1 answer
29 views

balanced growth path clarification and why wage rate and consumption on BGP have same growth rate

We say the economy converges to a balanced growth path if all variables are growing at a constant rate. But what does it mean? For example in Solow model with production function $F(K_t,A_tL_t)$ where ...
Nonenicht's user avatar
0 votes
1 answer
57 views

What would happen if we had decreasing returns to scale in the solow-swan growth model? Would there still be a steady state and perfect competition?

I understand with IRS we have explosive growth and a single firm would eventually dominate the market since MC < AC, and hence P < AC, so firms would leave the market. I am struggling to find ...
georgetbarber's user avatar
3 votes
0 answers
32 views

Sustained growth in Ramsey model

It is known that in the classical Solow model that if we use CES production function instead of Cobb Douglas function, it is possible to have sustained growth if the substitutability is larger than 1. ...
邵嘉喻's user avatar
2 votes
1 answer
66 views

Balanced growth path in the Hicks neutral technology and CES function

In an another post (Balanced growth path definition in the Hicks neutral steady state with technology), the problem of having a not stationary steady state in a Solow model with Hicks neutral ...
Veronica's user avatar
1 vote
1 answer
121 views

Balanced Growth Path in a 3-Sector Economy

I'm going over a past paper for a macro course I'm taking and have gotten stuck on the last part of one of the questions. Suppose we have a three-sector economy. We are given $B_a,B_s>0$, a ...
Joseph Basford's user avatar
1 vote
1 answer
96 views

In Solow model, on the balanced growth path, why aren't wages zero?

According to this primer on the Solow Growth model, wages are equal to $w = \frac{\partial Y}{\partial L} = A \left(f(k) - f^{\prime}(k)k\right)$. In the balanced growth path we know that $\dot{k} = 0 ...
gb1729's user avatar
  • 13
1 vote
0 answers
30 views

Stylized facts in macroeconomics [closed]

Max $E_0 \sum_{t=1}^{\infty}\beta^t u(C_t , L_t)=E_0 \sum_{t=1}^{\infty}\beta^t[logC_t-B\frac{N_t ^{1+\gamma}}{1+\gamma}]$ $Y_t=A_t K_t^{1-\alpha}(N_t X_t)^\alpha$ where $X_t$ is labor augmenting ...
img's user avatar
  • 11
0 votes
0 answers
155 views

Solow Model With Land as Factor

Given the production function: $$Y = K^\alpha (AL)^\beta R^{1-\alpha -\beta}$$. Where $L, A$ grow at exogenously given rates $n, g$ respectively. $R$ is land and is constant in supply and given that $\...
Dayne's user avatar
  • 1,735
3 votes
1 answer
98 views

Balanced growth path with specific technology

Resource constraint: $Y_t =C_t +I_t $ CRS Production function: $Y_t =K_t^{\alpha} (N_t X_t )^{1-\alpha}$ Investment function: $I_t =\frac{1}{q_t}(K_{t+1} -(1-\delta)K_t )$ The labor-augmenting ...
guest's user avatar
  • 280
2 votes
1 answer
68 views

Solow model response function

Consider a Solow model without technological progress so that the steady state $k^*$ occurs at $sf(k^*) = (n+\delta)k^*$ where $n$ is population growth rate, $\delta$ is capital depreciation rate and $...
Panhaboth K's user avatar
3 votes
3 answers
89 views

Proving a result In Jones (1999) "Growth: With or Without Scale Effects"

Jones (1999) builds his semi-endogenous growth model where output is produced with only one input, labour, in the following "research" function: $$ Y = A^\alpha L_Y $$ Labour is augmented with ...
Lieu Zheng Hong's user avatar
0 votes
1 answer
34 views

Wage Growth Rate in the R&D Model

I am trying to understand the R&D model and how to calculate the growth rate of wage in this model. There is no equation given, but it’s stated that : household income must equal total ...
randomname's user avatar
2 votes
0 answers
54 views

The maximum sustainable yield model: clarifications

I would like your help to understand the Maximum sustainable yield model. This is what I understood with some questions. We consider a population of individuals who are born, possibly reproduce ...
Star's user avatar
  • 446
2 votes
1 answer
88 views

Why are we using exp(.) as the functional form in the household maximization problem inside the RCK model?

Currently I'm studying the RCK model at my Advanced Macroeconomics I classes. A question arose almost immediately when I saw the utility function of a household in this model. The question is: why ...
shannontesla's user avatar
1 vote
1 answer
623 views

Why does capital initially reduce and then rise with an anticipated future decrease in taxes in the RCK model?

Consider the version of the RCK model where there is a government that runs a constant balanced budget. At $t_0$, the economy is in steady state, with constant tax $T_{old} > 0$ Then, at $...
ahorn's user avatar
  • 1,230
2 votes
1 answer
170 views

Can saddle path not go through the origin in Ramsey model?

In my case, the utility function is CEIS and discrete, the production fuction is $f(k_{t})=k_{t}^\alpha$, the budget constraint is $f(k_{t})+(1-\delta)k_{t}=c_{t} + k_{t+1}$. I use Jacobian matrix and ...
user68863's user avatar
  • 131
2 votes
1 answer
77 views

Comparative Statics on Balanced Growth Path

It would be a silly question. In a model, I have found the BGP (balanced growth path) for all key variables. As expected, these variables are constant variables ; $$\mu^{BGP}=\frac{\alpha+\rho+\pi}{...
optimal control's user avatar
1 vote
0 answers
500 views

How to Show That, on a Balanced Growth Path, Two Variables Grow at the Same Rate

If we are given that a variable is on a balanced growth path (for sake of argument we shall assume consumption), how do we show that another variable related to consumption (like capital or wealth) ...
DornerA's user avatar
  • 1,568
4 votes
1 answer
591 views

Calculating Time to Balanced Growth Path

$\textbf{Model:}$ $$\underset{\{c_t,k_t\}}{max}\;\sum_{t=0}^\infty\beta^t\frac{c_t^{1-\gamma}}{1-\gamma}$$ $$s.t.\;c_t=Rk_{t-1}-k_t$$ $$c_t,k_t\geq0$$ At time $t$, $c_t$ is consumption and $k_{t-1}$ ...
DornerA's user avatar
  • 1,568
4 votes
1 answer
484 views

Balanced Growth Path (Qualifier Question)

$\textbf{Full disclaimer:}$ I am studying for my candidacy exams and this question is from one of the exams last year. $$max\;\sum_{t=0}^\infty \beta^t \frac{c_t^{1-\gamma}}{1-\gamma}$$Subject to the ...
DornerA's user avatar
  • 1,568