Re: Jnu 2005

Posted by Arushi :)) on Mar 24, 2014; 4:20am
URL: http://discussion-forum.276.s1.nabble.com/Jnu-2005-tp7585391p7585407.html

i have also used harrod domar  equation only, in a little different way.
See here we are given 5% as the rate of growth of GDP
But we can't use the equation s/theta= n+g because g is the per capita rate of growth and we are not given that, we are given the overall rate of growth of GDP.
so to eliminate g i did'nt use the equation directly.
In per capita terms , capital per worker = K/L
If we want to see the rate of growth of capital per worker ;
the usual procedure is taking natural logarithm and differentiate wrt time.
That way we get rate of growth of per capita capital equals (dK/dt)/K - (dL/dt)/L
Now dK/dt can be seen as change in capital with time, since we are assuming depreciation to be zero, we can solely take dK to be investment which equals saving on a period of time dt.
So, dK/dt is the investment and now savings = investment ,we can write dK/dt= s*Q
We can assume that in the long run capital won't grow, output can grow, but at the steady state capital won't change,
so per capita rate of growth of capital will be zero in long run;
which will give,
(s*Q)/K= (dL/dt)/L
RHS = 2%
s = 20% implies K/Q = 10 .
I hope you got it :/