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Advanced Macroeconomics 5th Edition Romer Solutions Manual
Advanced Macroeconomics 5th Edition Romer Solutions Manual
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ions-manual/
SOLUTIONS TO CHAPTER 1
Problem 1.1
(a) Since the growth rate of a variable equals the time derivative of its log, as shown by equation (1.10)
in the text, we can write
( t ) d ln Z( t ) d ln X( t )Y( t )
Z
(1) .
Z( t ) dt dt
Since the log of the product of two variables equals the sum of their logs, we have
( t ) d ln X( t ) ln Y( t ) d ln X( t ) d ln Y( t )
Z
(2) ,
Z( t ) dt dt dt
or simply
(t) X
Z (t) Y (t)
(3) .
Z( t ) X( t ) Y( t )
(b) Again, since the growth rate of a variable equals the time derivative of its log, we can write
( t ) d ln Z( t ) d ln X( t ) Y( t )
Z
(4) .
Z( t ) dt dt
Since the log of the ratio of two variables equals the difference in their logs, we have
( t ) d ln X( t ) ln Y( t ) d ln X( t ) d ln Y( t )
Z
(5) ,
Z( t ) dt dt dt
or simply
(t) X
Z (t) Y (t)
(6) .
Z( t ) X( t ) Y( t )
(c) We have
( t ) d ln Z( t ) d ln[ X( t ) ]
Z
(7) .
Z( t ) dt dt
Using the fact that ln[X(t) ] = lnX(t), we have
( t ) d ln X( t )
Z d ln X( t ) (t)
X
(8) ,
Z( t ) dt dt X( t )
where we have used the fact that is a constant.
Problem 1.2
(a) Using the information provided in the question,
( t ) X( t ) , is (t)
X
the path of the growth rate of X, X
depicted in the figure at right. X( t )
Problem 1.3
(a) The slope of the break-even investment line is
Inv/ (n + g + )k
given by (n + g + ) and thus a fall in the rate of eff lab
depreciation, , decreases the slope of the break-
even investment line. (n + g + NEW)k
k* k*NEW k
k*NEW k* k
Solutions to Chapter 1 1-3
In addition, the effect of a rise in on k* is ambiguous and depends on the relative magnitudes of s and
(n + g + ). It is possible to show that a rise in capital's share, , will cause k* to rise if s > (n + g + ).
This is the case depicted in the figure above.
Problem 1.4
(a) At some time, call it t0 , there is a discrete upward jump in the number of workers. This reduces the
amount of capital per unit of effective labor from k* to kNEW . We can see this by simply looking at the
definition, k K/AL . An increase in L without a jump in K or A causes k to fall. Since f ' (k) > 0, this
fall in the amount of capital per unit of effective labor reduces the amount of output per unit of effective
labor as well. In the figure below, y falls from y* to yNEW .
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Conclusion.
John Emery Bucher was born near Hanover, Pa., August 17,
1872. He entered Lehigh University in 1888 and graduated in 1891.
During the past three years he has been a graduate student in the
Johns Hopkins University.
Subjects: Chemistry, Mineralogy and Mathematics.
TRANSCRIBER’S NOTES
1. Silently corrected obvious typographical errors and
variations in spelling.
2. Retained archaic, non-standard, and uncertain spellings
as printed.
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