# Problem Set 3 MSU EC 410 Prof. Ahlin due 11/8/16 1a. Use the H-augmented Solow model to determine the a) instantaneous impact on GDP per capita, b)…

Question 2 in file

2. Growth Simulations continued. See GrowthSimulationQuestionb.xlsx posted on D2L. Fill in 200 years ofdata using the H-Solow model using the functions and parameters given in the “GrowthCalculations”worksheet. The savings rate increases to 30% at year 25. The H-Solow model is columns W-AE. Specifically:f(k,h) = k1/3h1/3, A=5, n=0.01, d=0.04, q = 0.1, and s=0.2. Physical capital per person starts at \$4000, humancapital per person starts at \$2000. Fill out k, h, y, c, k, h, and gy for 200 years.Note that the savings rate s switches to 0.3 at the 25th year. Make sure to incorporate this in your answers.[Hint: it will only affect the consumption formula and the k column formula for the H-Solow model.]a. Give the formulas used for all columns (in mathematical syntax, not Excel syntax):k, h, y, c, k, h, and gyb. Give the income and consumption levels in year 24 and in year 200. How does the effectiveness of theincrease in s in the H-Solow model compare to its effectiveness in the H-D and Solow models? Justify youranswer.c. Look at the graphs for the models (which are in the other worksheets in the Excel file, and should be filledout automatically from the data you generate in the GrowthCalculations worksheet). Look at both H-D graphs,but focus on the one using logs. Discuss one significant way in which all three models’ graphs are similar.How do the Solow and H-Solow graphs differ? Do not turn in your spreadsheet, but along with answering thequestions here, also print out the H-Solow graph and turn it in.