Part 3 - Malthusian Model

Question 1

Overview

Answer 1

Any advances in the technology for producing food inevitably lead to further population growth.

Question 2

Overview

Answer 2

Higher population ultimately reduces the average person to the subsistence level of consumption they had before the advance in technology.

Question 3

Model Setup

Answer 3

• Closed economy two-period model

- Output, i.e., food, is produced from a fixed quantity of land

Question 4

Convergence to Steady State

Answer 4

Suppose that N N*:

I Relatively small quantity of consumption per worker possible. Implies that the population decreases to N*

Question 5

Increas in Z

Answer 5

• If z increases, this shifts up the per-worker production function.
• In the long-run, the population increases to the point where per capita consumption c returns to its initial level.
• There is no long-run change in living standards: g(c) is unchanged.