Teil 4 Flashcards Preview

BMAK > Teil 4 > Flashcards

Flashcards in Teil 4 Deck (12)
Loading flashcards...
1
Q

Marginal Product of Captial

A

MPK > 0

  • MPK is always positive
    • If we build up more capital, we are able to produce more
  • But DIMINISHING MPK
    • ​Value of each additional Capital is decreasing
2
Q

Capital Accumulation Function

A

Kt+1 = It + (1-D)*Kt

3
Q

Gross Investment

A

It = s * Yt

4
Q

National Savings

A

S=SPVT

Y = C + I

=> S=SPVT= I

Any Domestic Saving is used to fund domestic Investment

Annahmen:

  • SGOV = 0
  • CA = 0
5
Q

Consumption Function

A

C = Y - (s*Y)

6
Q

Steady State Level

A

-> Long Run Level of Output

  • Steady State Leven of Physcial Kapital, K*, depends on
    • saving rate
    • depreciaton rate
    • share of capital
7
Q

Key Predictions of SIMPLE Solow Groth Model

A
  1. NO long run growth
  2. Capital Accumulation is a TEMPORARY source of growth
    • stops growing as soon as we reach steady state
  3. Catch-Up Effect:
    • Conditional on same production technology and saving rate
    • poorer countries will catch up with richer countries
  4. Key Mechanisem: Diminshing MPK
  5. Countrys that have a diffrent saving rate,… have a diffrent steady state
    • Simple Solow Model is simply saying that every country converges to STEADY STATE
  6. If you have nothing to start out with, you won’t get to steady state
    • Stock of Physical Capital will always remain equalt to zero
8
Q

Simple Solow Growth Model

A

No increase in population growth and no increase in technological progress

9
Q

THE Solow Growth Model

A
  • with population growth
  • and with technological progress
10
Q

Steady State for Y, K, I, C

A

Steady State does NOT EXIST

  • Both A & L are growing
11
Q

Steady State for per effective worker

A

Exists!!!

12
Q

Key Predictions of THE Solow Growth Model

A
  1. Catch Up of Poor Economie
    • relative Catch Up in per effective worker steady state if model paramters are the same
    • NO ABSOLUT Catch up in standards of living nor Output whenever diffrent inital conditions
  2. Growht Predictions
    • per Worker quantities growht by g
    • total output grows by g + n