ROMER, David (2006) Advanced Macroeconomics

8/3/2019 ROMER, David (2006) Advanced Macroeconomics

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L

ULATION



FULL CAPITAL ACCUMULATION:

k n k g



=ALk, thereforegrows at rate

+g)



Starts and ends at dk(t)/dt=0

slowly increases to newk=k*(new)

initial vertical jump,

expodential decay to

initial balanced growth

path Y/L --> g

Output/worker

permanently increased,

but same growth rate,

hence same slope to

initial growth path



when MPk*>n+g

+d, then dc*/ds is

ncreasing.



via "implicit"

differentiation

elasticity of output wrt k, where

k=k*

f'(k*)= dy*/dk*

f(k*) = y*,

therefore:

k*/y* x dy*/dk*



second derivative:

elasticity of output

wrt k, evaluated at

k*



ONCLUSION



ong

vergence

ult.

ROMER, David (2006) Advanced Macroeconomics

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