I need an explanation for this Economics question to help me study.
Please let me know if you have any questions.
Topics:
1-Capital’s Role in Production
Lecture
2-The Role of Population in Economic Growth
Lecture
3-The Effect of Human Capital on Growth
Lecture
4-Measuring Productivity Growth Across Countries & Technology and Productivity
Essay Questions: Please answer BOTH of the following essay questions.
1. (25 points) Imagine that one of the long-run effects of the current
COVID-19 pandemic is to make people more conservative such that their
savings rates increase.
A. Using the Solow model, describe what the short and long-run impacts
of this change are? Does consumption go up or down in the short
and long-runs? What happens to the capital stock per person? What
happens to growth rate of output per capita in the short and long-runs?
B. Now assume that an additional effect of the pandemic is that the population growth rate also increases. How does this impact your previous
answer?
2. (25 points) Imagine that the world is now described by the Malthusian
Model.
A. What are the assumptions that make the world Malthusian (rather
than being described by the Solow Model)?
B. What is the effect of a pandemic, such as the Black Death or COVID-
19, in the short and long-runs in the Malthusian model? Assume the
diseases do not permanently impact health|they just kill a bunch of
people quickly and the survivors are left the same as before.
C. Now assume that, similar to Question 1, the fertility rate increases as
a result of the pandemic. How does this change your answer to part
B?
