My Math Forum Macroeconomics 3 - need help with an excercise

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 November 7th, 2012, 08:40 AM #1 Newbie   Joined: Nov 2012 Posts: 2 Thanks: 0 Macroeconomics 3 - need help with an excercise 1 Problem sets 2 and 3 1. Imagine a Ramsey type of model, where we introduce a human capital into the model. The production function is given by: Yt = K K t H H t ; where K < 1; H < 1; and K + H < 1: The laws of motion for the two types of capital are: Kt+1 = Kt(1 .. K) + IK;t; Ht+1 = Ht(1 .. H) + IH;t: The remainder of the setup is the same as during your lectures. The economy is closed, so the aggregate resource constraint is: Yt = Ct + IH;t + IK;t a. Write the Bellman equation and determine the Euler equation! Com- ment on both! b. Determine the steady state of this economy! c. What does it depend on and how? Best regards

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