QUESTIONS FOR REVIEW

Question 9.1

1. In the Solow model, what determines the steady-state rate of growth of income per worker?

Question 9.2

2. In the steady state of the Solow model, at what rate does output per person grow? At what rate does capital per person grow? How does this compare with the U.S. experience?

Question 9.3

3. What data would you need to determine whether an economy has more or less capital than in the Golden Rule steady state?

Question 9.4

4. How can policymakers influence a nation’s saving rate?

Question 9.5

5. Give an example of an institutional difference between countries that might explain the differences in income per person.

Question 9.6

6. How does endogenous growth theory explain persistent growth without the assumption of exogenous technological progress? How does this differ from the Solow model?