Economic growth and economic development 666

Introduction to Modern Economic Growth fraction ϕ of workers employed in the final good production will not be able to adapt to this new technology and will need to remain unemployed for one time period to “retool” (1) Define an equilibrium in this economy [Hint: also specify the number of unemployed workers in equilibrium] (2) Characterize the balanced growth path of this economy and determine the number of unemployed workers in equilibrium (3) Show that the economy will experience bursts of unemployment, followed by periods of full employment (4) Show that a decline in ρ will increase the average growth rate and the average unemployment rate in the economy Exercise 14.18 * Derive equations (14.28)-(14.30) Exercise 14.19 * Consider the model discussed in subsection 14.2.2 (1) Choose a functional form for η (·) such that equations (14.30) have solutions L1R and L2R 6= L1R Explain why, when such solutions exist, there is a perfect foresight equilibrium with two-period endogenous cycles (2) Show that even when solutions exist, there also exists a steady-state equilibrium with constant research (3) Show that when such solutions not exist, there exists an equilibrium which exhibits oscillatory transitional dynamics converging to the steady state characterized in above Exercise 14.20 * Show that the results of the model in subsection 14.2.2 generalize when there is a single firm undertaking research, thus internalizing the effect of LR on η (LR ) Exercise 14.21 * Derive equation (14.37) Exercise 14.22 * Derive equation (14.50) [Hint: write ln Y (t) = i R1h Y (t) −n(ν) ln qi (ν, t) + ln w(t) λ dν and rearrange this equation] R1 ln q (ν, t) l (ν, t) dν = Exercise 14.23 * Prove Proposition 14.7 Exercise 14.24 * Complete the proof of Proposition 14.8, in particular, prove that z0∗ > z1∗ [Hint: use similar arguments to the first part of the proof.] 652