Introduction to Modern Economic Growth (2) Determine transformed variables that will remain constant in a steady state allocation (3) Characterize the steady state equilibrium and the transitional dynamics (4) Why does faster technological progress lead to more rapid accumulation of human capital? Exercise 10.14 * Characterize the optimal growth path of the economy in Section 10.4 subject to the additional constraints that ik (t) ≥ and ih (t) ≥ Exercise 10.15 Derive equation (10.25) Exercise 10.16 Derive equations (10.32) and (10.33) Exercise 10.17 Provide conditions on f (·) and γ (·) such that the unique steadystate equilibrium in the model of Section 10.5 is locally stable Exercise 10.18 Analyze the economy in Section 10.6 under the closed economy assumption Show that an increase in a1 for group will now create a dynamic externality, in the sense that current output will increase and this will lead to greater physical and human capital investments next periods Exercise 10.19 Prove Proposition 10.5 504