{ "cells": [ { "cell_type": "markdown", "metadata": {}, "source": [ "# Using the Solow Growth Model Support\n", "\n", "\n", "\n", "----\n", "\n", " " ] }, { "cell_type": "markdown", "metadata": {}, "source": [ "### Consumption\n", "\n", "(1)    $ C = (1-s)Y $\n", "\n", "(2)    $ \\frac{C}{L} = (1-s)\\left(\\frac{Y}{L}\\right) $\n", "\n", "Along an economy's balanced-growth path:\n", "\n", "(3)    $ \\left(\\frac{Y}{L}\\right)^{*} = \n", " {\\left(\\frac{K}{Y}\\right)^{*}}^\\left(\\frac{\\alpha}\n", " {1-\\alpha}\\right)E $\n", " \n", "(4)    $ \\left(\\frac{Y}{L}\\right)^{*} = \n", " \\left(\\frac{s}{n+g+\\delta}\\right)^\\left(\\frac{\\alpha}\n", " {1-\\alpha}\\right)E $\n", " \n", "(5)    $ \\left(\\frac{C}{L}\\right)^{*} = \n", " \\left(1-s\\right)\n", " \\left(\\frac{s}{n+g+\\delta}\\right)^\\left(\\frac{\\alpha}\n", " {1-\\alpha}\\right)E $\n", " \n", "(6)    $ ln\\left(\\frac{C}{L}\\right)^{*} = \n", " ln\\left(1-s\\right) +\n", " \\left(\\frac{\\alpha}{1-\\alpha}\\right)ln(s) - \n", " \\left(\\frac{\\alpha}{1-\\alpha}\\right)ln(n+g+\\delta) + \n", " ln(E) $\n", " \n", "(7)    $ \\frac{d\\left(ln\\left(\\frac{C}{L}\\right)^{*}\\right)}\n", " {ds} = \n", " \\frac{-1}{1-s} +\n", " \\left(\\frac{\\alpha}{1-\\alpha}\\right)\\left(\\frac{1}{s}\\right) $\n", " \n", "(8)    $ \\frac{d\\left(ln\\left(\\frac{C}{L}\\right)^{*}\\right)}\n", " {ds} = 0 ⇒ \\frac{1}{1-s} = \n", " \\left(\\frac{\\alpha}{1-\\alpha}\\right)\\left(\\frac{1}{s}\\right) $\n", " \n", "(9)    $ s = \\alpha ⇒ \\left(\\frac{C}{Y}\\right)^{*} $ is maximized" ] } ], "metadata": { "kernelspec": { "display_name": "Python 3", "language": "python", "name": "python3" }, "language_info": { "codemirror_mode": { "name": "ipython", "version": 3 }, "file_extension": ".py", "mimetype": "text/x-python", "name": "python", "nbconvert_exporter": "python", "pygments_lexer": "ipython3", "version": "3.6.5" } }, "nbformat": 4, "nbformat_minor": 2 }