Consider the two-country model of technology growth. Suppose that yA,1 > YA,2 and that the two countries are in steady state. (a) Suppose now that Country 1 raises the fraction of the labor force that is doing R&D. Draw a picture showing how the rates of growth in Countries 1 and 2 will behave over time. (b) Now suppose that Country 2 raises the fraction of the labor force that is doing R&D so much that yA,1 < VA,2. Draw a picture showing how the rates of growth in Countries 1 and 2 will behave over time.
Consider the two-country model of technology growth. Suppose that yA,1 > YA,2 and that the two countries are in steady state. (a) Suppose now that Country 1 raises the fraction of the labor force that is doing R&D. Draw a picture showing how the rates of growth in Countries 1 and 2 will behave over time. (b) Now suppose that Country 2 raises the fraction of the labor force that is doing R&D so much that yA,1 < VA,2. Draw a picture showing how the rates of growth in Countries 1 and 2 will behave over time.
Chapter8: Productivity And Growth
Section: Chapter Questions
Problem 2.4P
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