Savings, Capital Accumulation And Output

Question 1

How does capital accumulation affect growth

Answer 1

It increases output but does not lead to sustained growth.

Question 2

What are the twi relations between output and capital

Answer 2

Capital determines production and production determines savings and thus capital accumulation

Question 3

What is the functional relation between capital per worker and output per worker

Answer 3

Y/N=f(K/N,1)

The effect if increased capital per worker decreases

Question 4

What is the relationship between investment, the savings rate and production

Answer 4

I=s*Y

Question 5

By what function does capital change through time

Answer 5

K(t+1)=(1-d)*K(t)+I(t)
d for depreciation rate, amount of capital that breaks down during the time period

Question 6

What is the relationship between growth and capital accumulation expressed as a function

Answer 6

(K(t+1)-K(t))/N = (sY(t)-dK(t))/N

the difference in capital between periods is equal to the savings rate times production minus depreciation aka what you kept from the harvest

Question 7

What is the steady state of capital per worker

Answer 7

sf(K/N) = dK/N
The state at which capital does not accumulate as it is depreciated at the rate at which it is raised. It is the minimum savings rate that the economy needs to sustain itself
Y(steady)/N = f(K(steady)/N) steady

Question 8

Ehat is stalinist growth

Answer 8

Unsustainable growth through higher and higher capital accumulation over time without technological progress

Question 9

Why is the plato of the output per capital per worker not generate the most efficient,

Answer 9

Because at that point depreciation catches up with output from capital accumulation

Question 10

Why does sustained increased capital accumulation not lead to sustained economic growth

Answer 10

Because the growth per capital decreases with increased capital while depreciation remains linear. At some point the capital becomes to much to maintain for the labor

Question 11

How can governments increase saving

Answer 11

They can work towards a budget surplus increasing public savings and they can give tax breaks to people who save to increase private savings

Question 12

Why can increased savings lower consumption even in the long run

Answer 12

Because what is saved is not consumed and lower consumption lowers production which lowers the amount that can be saved but people who are optimistic consume more and more saving gives hope

Question 13

What is the golden rule level of capital

Answer 13

The savings rate that leads to the maximum consumption per worker

Question 14

What is the production function equations

Answer 14

Y/N = sqrt(K/N)

Question 15

What is the difference and implications of a gully funded and pay as you go retirement system.

Answer 15

All retirement systems decrease private savings but the funded saves for them while pay as you go just gives out the money and thus decreases savings and thus output

Question 16

What is the equation describing the evolution of output over time

Answer 16

K(t+1)/N-K(t)/N=ssqrt(K(t)/N))-dK(t)/N

Question 17

What is the equation for steady production per worker

Answer 17

Y*/N=s/d

Question 18

What can led to higher steady state output per worker

Answer 18

Decreased depreciation rate and increased savings rate

Question 19

What is the equation for steady state consumption per worker

Answer 19

C/N=Y/N-dK/N = s(1-s)/d

Question 20

What is meant by people suffering from hyperbolic discounting

Answer 20

That people have a tendency to not save enough and procrastinate saving. They want an apple today rather than an apple tomorrow but are indifferent between an apple tomorrow and an apple in a week

Question 21

What is save more tomortow

Answer 21

A nudge policy to get people to save more by deciding to do so beforehand which is less psychologically taxing than deciding to save immediately

Question 22

What is human capital

Answer 22

The skill of the workers

Question 23

Does human capital lead to the same development in output as normal capital

Answer 23

Yes, a little education leads to a strong improvement while further is marginal. In the end the cost of educating becomes larger than the gain from it

Question 24

Wy do people want to achieve the stable stare when it comes to capital

Answer 24

Because ti is at that rate that capital per worker is maxed although not necessarily consumption which is in the golden ratio

Question 25

What ate models that generate steady growth without technological progress

Answer 25

Endogenous growth models

Question 26

How does population growth affect the output per person

Answer 26

It is incorporated in the depreciation that becomes larger is then called required growth because it is no longer just machines breaking but a smaller share of a pie that must grow for people to not go without less