Questions tagged [balanced-growth]

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In Solow growth model, increasing consumption drops production which should measure GDP?

Consider Solow growth model $Y=F(K,AL)$ where $A$ measures knowledge progress, $K$ is capital and $L$ is label. I have suppressed temporal dependence. I am going to assume $L$, $A$ grow exponentially ...
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70 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 ...
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1answer
28 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 ...
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21 views

Ramsey Model and Transversality Condition

I am trying to understand the intuitive interpretation of the TVC. I have two expressions from two different household optimisation problems that should be actually similar or equal intuitively as ...
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24 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 ...
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1answer
73 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 ...
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1answer
186 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 $...
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1answer
91 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 ...
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1answer
56 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}{...
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0answers
421 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) ...
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491 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 $k_{t-1}$ ...
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385 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 ...