# Tag Info

Accepted

### Solow Model: Steady State v Balanced Growth Path

This is when the attempt at accuracy creates confusion and misunderstanding. Back in the day, growth models were not incorporating technological progress, and led to a long-run equilibrium ...
• 32.9k
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### "If $\lambda$ is greater than than 1, the system explodes." Why does the system explode?

Eq. (2.64) can be written as (at first order) $$k_{t+1} - k^* = \lambda (k_t - k^*) \tag{1a}$$ Define the quantity $\kappa_t$ as $$\kappa_t \stackrel{\rm def}{=} k_t - k^* \tag{2}$$ So that ...
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### "If $\lambda$ is greater than than 1, the system explodes." Why does the system explode?

A system is explosive if its coefficients are non-stationary. Stationary is an important property to have in dynamic models as it tells us that an equilibrium value is obtainable (which is important ...
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### Solow Model: Steady State v Balanced Growth Path

Following the conversation with user @denesp at the comments of my previous answer, I have to clarify the following: the usual graphical device we use related to the basic Solow growth model (see for ...
• 32.9k
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• 50.3k

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### Solow model, time and steady state

In the model with technological progress the capital per effective worker remains constant, implies that capital per worker grows at the rate of exogenous rate of technological progress. See Barro and ...
Accepted

### Evaluation around steady state for a specific DSGE Model

I found the error in my derivation: I mistakenly supposet that the steady state of $p_t+1$ equals $\bar{\rho}$. I did not recognize that p was different from $\rho$ because of the poor quality of my ...
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### What does steady state mean?

Usually the term steady state is derived from the Solow Model and its derivatives that seek to explain long-term economic growth. The steady state is a state in which the growth rate of the economy is ...
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### Would a zero-growth economy with zero-growth population still have the same GDP?

Smith pointed out that as wealth was growing in any nation, the rate of profit would tend to fall and investment opportunities would diminish. Source The first half of the sentence makes it ...
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Accepted

Let's guess that the value function is of the form $a + b \ln(k)$. Then substituting for $V(k) = a + b \ln(k)$ in the Bellman equation gives: $$a + b \ln(k) = \max_{k'}\left(\ln(k^\alpha - k') + \... • 8,692 2 votes Accepted ### Solow model with population growth - proof of steady state level of capital per worker Part 2 of the solution I post a step by step solution, slow passages are the best way to avoid mistakes (I hope). In the previuos answer we calculated the intensive production function:$$f(k)=z[\...
Is that derivation for $k(t+1)$ correct? Technically, you never reach the steady state, but only asimptotically as $t\rightarrow\infty$, but at infinity the $A(t)$ will also be infinite because it ...