Calculate According To The Values Of Adjacent Boxes

Nov 15, 2009

In the chart I attached there are 20 columns and 7 rows. The calculations are as follows: K in first period - 8 (given). product per worker (y) - 2*K^(1/3) = 4. Total invesment - s*y - s (savings rate) is given as 0.1 and y was calculated in the previous line. s*y = 0.1*4 = 0.4

Depreciation on capital - deperciation rate is set at 2.5% (0.0025) so the depreciation is 0.0025*k = 0.0025*8 = 0.2. Net investment = Total investment (0.4) -Depreciation (0.2) = 0.2. Consumption per worker = product per worker (4) - Net investment (0.4) = 3.6

Growtn in product per worker - Can only start calculating from next period. It is (yt-yt-1)/yt-1. (Next year's product per worker minus this year's product per worker, the answer is divided by last year's product per worker).

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Capture.PNG

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