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The accumulation equation that we have been using in the Solow
model can be written as

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Question: The accumulation equation that we have been using in the Solow model can be written as (everythin…
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(everything is in per capita terms):

finalized_jax”>$\(\delta\)$

Let us suppose that the production function is given by y(t) =
Ak(t). Based on this information

1. Define g(t) as

g(t) =k(t + 1)/k(t) –
1

Prove that this is equal to growth rate of income per-capita
(y(t)).

2. Prove that sA = (1 + n)(1 + g) – (1 –
finalized_jax”>$\(\delta\)$

3.As we have seen in the traditional Solow model, the savings
rate do not aect the rate

of growth of income. But in here savings do seem to impact the
growth rate. Explain

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