Sunday, March 27, 2011

Subjects In Secondary School Singapore 1970

relevant Solow Growth Model

There is a relevant equation of the Solow model and is the capital accumulation equation.
\dot{K}_t = \frac{\part K_t}{\part t} = sY_t - K_t\delta \,
Where:

s\, = Savings rate
Y_t\, = Product of the economy in period t
\delta\, = rate of depreciation of existing capital.
K_t\, = Total capital in period t

sY\, The term represents the actual investment in capital that can perform
economy, which is the product multiplied by the rate of savings (since the model assumes that all savings are inverted). The second term of the equation represents the investment \delta K\, replacement (or depreciation costs) that represents how much capital is no longer useful or useless for the accumulation of capital. To further explore the replacement investment is necessary to determine the same equation in per capita terms and effective.

To calculate the increase in capital stock per capita, deriving, using the chain rule and the resulting equation substiyendo the result (4) we have:
\dot{k}  = \frac{\part}{\part t}\left(\frac{K}{AL}\right) = \frac{\dot{K}_t}{A_tL_t} - \frac{K_t}{A_tL_t^2}\dot{L}_t - \frac{K_t}{A_t^2L_t}\dot{A}_t  = \frac{sY}{AL} - \frac{K}{L} \left( \delta + \frac{\dot{A}}{A} + \frac{\dot{L}}{L} \right) = sy - (\delta + g+ n)k

Where:
n:= \Delta L/L\,

This last equation has the look like (4), but in per capita terms, with an investment of replacement equal to that
shows the amount of investment capital needed to maintain constant. Increases in depreciation, would decrease the effects of capital accumulation, and therefore, a lower [steady state] of capital. Increases in the rate of population growth, would cause a smaller increase or decrease in capital accumulation per capita cash.

investment is necessary for effective movement can sustain itself or depreciation, as well as population growth and new technology needed to produce physical investment. If we have high rates of population growth, is difficult for the per capita cash capital increase, as there will be more machines to distribute among new potentially productive individuals who enter the market. Also, increases in the rate of technology need to produce new machinery, so there must be investment to support effective technology increases.

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