4. Suppose the rates of return to capital are equalized across countries because the world is an open economy, and suppose that all countries are on their balanced growth paths. Assume the production...

4. Suppose the rates of return to capital are<br>equalized across countries because the world<br>is an open economy, and suppose that all<br>countries are on their balanced growth paths.<br>Assume the production function looks like Y :<br>IK@L1-a, where I reflects differences in social<br>infrastructure.<br>a. Show that differences in I across countries do<br>not lead to differences in investment rates.<br>b. How might social infrastructure in general still<br>explain differences in investment rates?<br>

Extracted text: 4. Suppose the rates of return to capital are equalized across countries because the world is an open economy, and suppose that all countries are on their balanced growth paths. Assume the production function looks like Y : IK@L1-a, where I reflects differences in social infrastructure. a. Show that differences in I across countries do not lead to differences in investment rates. b. How might social infrastructure in general still explain differences in investment rates?

Jun 09, 2022

SOLUTION.PDF

Sun	Mon	Tue	Wed	Thu	Fri	Sat
30	31	1	2	3	4	5
6	7	8	9	10	11	12
13	14	15	16	17	18	19
20	21	22	23	24	25	26
27	28	29	30	1	2	3

4. Suppose the rates of return to capital are equalized across countries because the world is an open economy, and suppose that all countries are on their balanced growth paths. Assume the production...

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