dynamics of the olg model with capital Flashcards
what is the important assumption to determine the dynamics of the olg model with capital?
what is the assumption about the generations preferences which allow interpretation of savings rate?
what is the simpler form of the goods market clearing
what is the simple form of goods market clearing that defines the k_t+1 in terms of k_t and how is it defined?
how can simple goods market clearing equation be shown graphically?
how can you determine the slope of simple goods market clearing equation
why is it not possible to asssumr goods market clearing function is upwards sloping
how can you determine k2 using the diagram?
how do you find k3 on using the diagram?
The trick is to add the 45◦ line to the diagram. All points on this line have the property that their vertical height equals their horizontal width. In particular, we’ve already identified the vertical height k2 on the diagram, so if we find the point A on the 45◦ line that has this height, then this point’s horizontal width is also k2. If we drop down vertically from point A all the way to the horizontal axis we will arrive at the width k2 on the horizontal axis. Then we can use the curve to find k3 since that’s what the curve does — it shows the (kt, kt+1) pairs that satisfy the equilibrium condition (1).
how do you find k_(infinity)?
how can you determine the endogenous variable
how many stationary points are there for the capital stock?
What stationary points are stable and which are unstable? what is the implication about the economy?
why can you not rule out a pareto sub optimal outcome?
what is the formula for the time invariant level of capital which gives maximum?
