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Confused

can anyone walk me through how to work this out?

If f(k) = 2k^0.5, s = 0.1, n = 0.1, and d = 0.05, what is the value of f(k) at equilibrium?

Reply 1

js93

Original post by schlut

can anyone walk me through how to work this out?

If f(k) = 2k^0.5, s = 0.1, n = 0.1, and d = 0.05, what is the value of f(k) at equilibrium?

Are you referring to the Solow model here? If so the steady state equilibrium is when delta-k=0, which is achieved when saving exactly equals population growth and depreciation (which i think is what you mean when you say n and d?)

Hence sf(k)=(n+d)k

0.2k^0.5 = 0.15k

solving for k yields; k= 0 or 16/9, plug into f(k)

Hope this helps

(edited 10 years ago)