The Rest of the Growth Model:The rest of the growth model is straightforward. First comes the need to keep track of the quantities of the model over time. Do so by attaching to each variable--like the capital stock or the efficiency of labor or output per worker or the labor force--a little subscript telling what year it applies to. Thus K1999 will be the capital stock in year 1999. If we want to refer to the efficiency of labor in the current year (but don't much care what the current year is), we will use a t (for "time) as a placeholder to stand in for the numerical value of the current year. Thus we write: Et. And if we want to refer to the efficiency of labor in the year after the current year, we will write: Et+1.We assume—once again making a simplifying leap of abstraction--that the labor force L of the economy is growing at a constant proportional rate given by the value of a parameter n. Note that n does not have to be the same across countries, and can shift over time in any one country). Thus between this year and the next the labor force will grow so that:
Lt+1 = (1+n) x Lt
Assume, also, that the efficiency of labor E is growing at a constant proportional rate given by a parameter g. (Note that g does not have to be the same across countries, and can shift over time in any one country.) Thus between this year and the next year:
Et+1 = (1+g) x EtLast, assume that a constant proportional share, equal to a parameter s, of real GDP is saved each year and invested. These gross investments add to the capital stock, so a higher amount of savings and investment means faster growth for the capital stock. But the capital stock does not grow by the full amount of gross investment. A fraction δ (the Greek letter lower-case delta, for depreciation) of the capital stock wears out or is scrapped each period. Thus the actual relationship between the capital stock now and the capital stock next year is:
Kt+1 = Kt + (s x Yt) - (δ x Kt)The level of the capital stock next year will be equal to the capital stock this year, plus the savings rate s times this year's level of real GDP, minus the depreciation rate δ times this year's capital stock.That is all there is to the growth model: three assumptions about rates of population growth, increases in the efficiency of labor, and investment, plus one additional equation to describe how the capital stock grows over time. Those plus the production function make up the growth model. It is simple. But understanding the processes of economic growth that the model generates is more complicated.
Latest technology based Macroeconomics Online Tutoring Assistance
Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Macroeconomics help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Macroeconomics, project ideas and tutorials. We provide email based Macroeconomics help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Macroeconomics. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Macroeconomics Homework help and assignment help services. They use their experience, as they have solved thousands of the Macroeconomics assignments, which may help you to solve your complex issues of Macroeconomics. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.
Algebraic Method for Combinational Logic tutorial all along with the key concepts of Getting Truth Table from Boolean Expression, Getting Boolean Expression from Truth Table, Exclusive- OR gate, Exclusive -NOR gate, Half Adder, Full Adder, Designing Circuits Using NAND Gates
Number system and codes tutorial all along with the key concepts of Binary number system, least significant bit, Binary to Decimal Conversion, Decimal to Binary Conversion, Octal number system, Octal to Decimal Conversion, Decimal to Octal Conversion, Octal to Binary Conversion, Hexadecimal number system
tutorsglobe.com aerial modifications assignment help-homework help by online modifications of stem tutors
a vacuum cleaner works through creating a low pressure area in the machine causing for air at atmospheric pressure to be forced or “sucked” into the system.
tutorsglobe.com pollination in salvia assignment help-homework help by online entomophily tutors
www.tutorsglobe.com offers carbonyl group modification homework help, carbonyl group modification assignment help, online tutoring assistance, organic chemistry solutions by online qualified tutor's help.
Theory and lecture notes on the concept of Frequency Response Considerations all along with the key concepts of Single Inverting Gain phase, Feedback and Stability, Two-Stage Non-Inverting Amplifier, Gain Margin and Phase Margin. Tutorsglobe offers homework help, assignment help and tutor’s assistance on Frequency Response Considerations.
Hire the best Crusaders and Muslims-12 Century Assignment Help tutors and get resolved from complex academic tasks at low prices.
tutorsglobe.com profits assignment help-homework help by online marginal productivity theory of distribution tutors
Arthropoda Class-Insecta tutorial all along with the key concepts of Characteristics of Arthropoda Class Insecta, Structure of the Insect, Water Regulation in Arthropoda, Tracheal System in Arthropoda, Wings of Arthropoda, Chitin - a Limiting Agent and Insect Societies
tutorsglobe.com purification of lead assignment help-homework help by online lead tutors
tutorsglobe.com energy resources assignment help-homework help by online natural resources tutors
We offer First-class Graph Theory Assignment Help service at most viable prices which always make you stand out from your peers.
manufacture of hydrogen tutorial all along with the key concepts of manufacture through chemical means, manufacturing by electrolysis, properties of hydrogen, uses of hydrogen
Physical Parameters Relevant to Water Analysis Notable Physical Parameters of Water, Method of Turbidity Determination, Standard colour solutions, Applications of Colour Data
1951227
Questions Asked
3689
Tutors
1491022
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!