The dynamics of the stationary system are given by
widetildeswidetilde
b Plot the components of the RHS of Equation and show the steady state of the system
in the graph.
c Calculate the steady state level widetilde as a function of sng and
d What is the growth rate of along the BGP
Q Solow Growth Model Comparative Statics
The savings rate in the economy given in QI increases. Discuss the implications of an increase
in the saving rate for the:
equilibrium value of widetilde
the growth rate of aggregate output
derived in Q Show the effect of an increase in the saving rate on the dynamics of the stationary
system given by Equation
