Hi, I am studying neoclassical growth theory and want to clarify what an exogenous increase in technology,
, means. (Please correct me if I’m wrong):
When
increases to
, technological growth is positive where
 > 0
This will cause the production function curve to shift up to where y = f(k, A2)
So when the economy reaches steady state at
, does that mean that technological growth is zero,
 = 0
, again until there is another exogenous increase of
What is happening in the economy as it is trying to reach to a new steady state with
?
Does this mean that there must always be exogenous increases of
to
A3
,
A4
, … for
, so there is annual growth in the economy (since at steady state growth of capital = 0, and
ŷ = Â
)?
I am not sure if I have a wrong understanding of exogenous tech change. Would really appreciate some help!
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more