Economics - Graduate Economics - Advanced macroeconomic theory - Macro Model Analysis

A Solow growth model problem. 'Production: Y = K^0.5 × L^0.5. Savings rate s=0.3. Depreciation δ=0.05. Population growth n=0.02.' Step 1: Per-worker production function: y = k^0.5. Step 2: Capital accumulation: Δk = sy - (δ+n)k = 0.3k^0.5 - 0.07k. Step 3: Steady state: Δk=0 → 0.3k^0.5 = 0.07k → k* =