ECON 359 TUTORIAL 2
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ECON 359
TUTORIAL 2
Tutorial Activity #3
In the Malthusian model suppose that initially the economy is in a steady state. Then at time to there is a technological advance that reduces the death rates.
(a) Using diagrams, show the effects of this change on the economy in both the short run and the long run. Clearly label the initial and subsequent steady states and briefly explain your results. For this part you need to draw two diagrams: One with c on the rr-axis and N'/N on the axis; and the other with I on the x-axis and c on the y-axis.
(b) Draw the time paths of each of the following variables in separate dia grams: JV, c, I and C. For each of the four diagrams, you should show time on the a:-axis and the variable of interest on the y-axis. In each case, start from the initial steady state, clearly mark time 柘 and show the convergence to the new steady state.
Tutorial Activity #4
Idea of the problem: In this problem, I provide specific functional forms for functions
F (•) and g (•). The functional forms include numerical parameter values. I ask students to solve for Nf as a function of N and then use this relationship to find population growth rate and derive an expression for the steady-state population. I then ask them to draw the timepath of population.
In the Malthusian model of economic growth, suppose the production function is given by:
Y = 1.05N,
where Y is output and N is population. Also suppose that population grows according to:
Nf _C
卞=N
where N‘ is the next period population and C is consumption. In equilibrium C = Y.
(a) What is the equilibrium growth rate of population, 三，顼 7
(b) What is N* such that Nr = N = N*?
(c) Suppose population of the economy in this question is No at time t = 0. Plot In (N) against time for this economy starting from time t = 0. What are the intercept and slope of the line that you have drawn?
2023-02-11