**SUMMER TERM 2020**

**SUMMER TERM 2020**

经济增长学代考 You can find your candidate number in your PORTICO account, under “My Studies” then the “Examinations” container.

**ECON0028: ECONOMICS OF GROWTH**

All work must be submitted anonymously. Please ensure that you add your **candidate number **and the module code to the template answer sheet provided. Note that the candidate number is a combination of four letters plus a number, e.g. ABCD9. You can find your candidate number in your PORTICO account, under “My Studies” then the “Examinations” container. Please, note that the candidate number is NOT the same as your student number (8 digits), which is printed on your UCL ID card. Submitting with your student number will delay marking and when your results might be available.

**Page limit: 12 pages**

Your answer should not exceed this page limit. This page limit is generous to accommodate students with large handwriting. We expect most of the submissions to be significantly shorter than the set page limit. If you exceed the maximum number of pages, the mark will be reduced by 10 percentage points, but the penalised mark will not be reduced below the pass mark: marks already at or below the pass mark will not be reduced.

*Answer **ALL **questions from Part A and **ONE **question from Part** **B 经济增长学代考*

*ALL*

*ONE*

*Part A accounts for 75 percent of the total mark, Part B accounts for 25 percent of the total. In cases where a student answers more questions than requested by the examination rubric, the policy of the Economics Department is that the student’s first set of answers up to the required number will be the ones that count (not the best answers). All remaining answers will be ignored.*

**Allow enough time to submit your work. **Waiting until the deadline for submission risks facing technical problems when submitting your work, due to limited network or systems capacity. 经济增长学代考

*By submitting this assessment, I **pledge my honour **that I have not violated UCL’s Assessment Regulations which are detailed in *__htt____ps://w____ww.uc____l.ac.uk/academic-__* *__manual/chapters/chapter-6-student-casework-framework/section-9-student-academic-__* *__misconduct-procedure__*, which include (but are not limited to) plagiarism, self-plagiarism, unauthorised collaboration between students, sharing my assessment with another student or third party, access another student’s assessment, falsification, contract cheating, and falsification of extenuating circumstances.*

**PART A ***经济增长学代考*

**PART A**

Answer ALL questions from this section.

1.(25 points) Assume that in the Solow model the aggregate production function takes the Cobb-Douglas form: where Y is output, A is a measure of productivity, K is capital and L is labour. Assume that the quantity of labour input, K, grows at the rate of n each period. The quantity of capital input, K, grows through investment but also decays due to wear and tear. Assume that a constant fraction of output is invested and denote this fraction γ. Also assume that a constant fraction of the capital stock depreciates each period; denote this fraction δ. Assume that A is constant. There is perfect competition in the markets for the output and the

(A)What is the share of income paid to capital in terms of the parameters of the model? Please show all work. *经济增长学代考*

(b)What are the steady state levels of capital per worker (k) and output per worker (y)? Please show all

(c)Consider two countries, Country 1 and Country 2. In Country 1 the growth rate of labour input is 0.1%, and in Country 2 it is 0.2%. In Country 1 the rate of investment is 40%. The two countries have the same levels of productivity, A. In both countries the rate of depreciation is equal to zero. The ratio of steady-state output per worker in Country 1 to steady-state output per worker in Country 2 is 2. Assuming that the value of α is 1/3, what is the rate of investment in Country 2? Please show all work.

### 2.(20 points) Consider the impact of population on economic growth. *经济增长学代考*

(a)How is the steady-state income per capita affected by the level of productivity in the Malthusian model? You may use examples and/or figures.

(b)How is the steady-state income per capita affected by the level of productivity in the Solow model? You may use examples and/or figures.

(c)Why do the two models above lead to such different conclusions regarding the impact of productivity on the steady-state income per capita? Please explain the intuition.

3.(15 points) Consider the two-country model of Technology and Economic Growth. Suppose that the cost-of-copying function is

where μ_{i} denotes the cost of invention, A_{1} denotes the level of technology in the leading country (Country 1), A_{2} denotes the level of technology in the follower country (Country 2), and 0 < β < 1. Assume that the two countries have labour forces of equal size: L_{1} = L_{2} =L. Denote by γ_{A,1} and ϒ_{A,2} the fractions of the labour force that is doing R&D in the leading and the follower country, respectively. *经济增长学代考*

(a)Using the cost-of-copying function, solve for the steady-state ratio of technology in the leading country to technology in the follower country (that is, A_{1}/A_{2}) as a function of the values of γ_{A}in the two countries. Show how this depends on the value of γ_{A}, and provide the economic intuition behind the result. Please show all

(b)Assume that β = 1/2, μ_{i}= 10, γ_{A,1} = 0.2, and γ_{A,2} = 0.1. Calculate the steady-state ratio of technology in Country 1 to technology in Country 2. Please show all work.

### 4.(15 points) Consider a country in which there are two sectors, called Sector 1 and Sector 2. The production functions in the two sectorsare:

where *L**1 *is the number of workers employed in Sector 1 and *L**2 *is the number of workers employed in Sector 2. The prices of goods produced in both Sector 1 and Sector 2 are equal to 1.

The total number of workers in the economy is *L *= 340. In Sector 1 workers are paid their *marginal *products, while in Sector 2 they are paid their *average *products. Workers move freely between sectors so that the wages are equal. *经济增长学代考*

(a)Calculate how many workers will work in each sector. Please show all work.

(b)How should the workers be allocated between the two sectors if wages in both sectors were set efficiently? What is the cost of misallocating workers between sectors (express the loss in output due to the misallocation as a percentage of the maximum possible output that can be produced in the economy)? Please show all work.

**PART B ***经济增长学代考*

**PART B**

Answer ONE question from this section.

B1. (25 points) How does human capital affect economic growth? In what ways is human capital similar to physical capital, and in what ways are the two different? How is human capital related to technology? You may use examples and/or figures.

B2. (25 points) Why are some countries rich and others poor? To increase economic prosperity (measured in terms of per capita income), what policies would you recommend to currently poor countries? Please base your answer on one or more of the concepts discussed in this module. You may use examples and/or figures.

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