Please explain your answers, thank you. d) Suppose the Chinese economy continues
ID: 1210064 • Letter: P
Question
Please explain your answers, thank you.
d) Suppose the Chinese economy continues to slow. Using economic models, explain the likely impact on the US
Recently, output growth slowed has slowed in China. Using the Solow model, explain why this pattern of slowing was to be expected. Explain why the Solow model predicts that a slower pace of population growth will spur more rapid economic growth. Suppose you have an economy with A = 1; k = 1, d = 0.05, and s = 0.1. If the value of alpha is 0.5, what is the steady state level of output?Explanation / Answer
Since 1978, China has remarkable economic growth which has attributed to reduction in global poverty and inequality. Augumented Solow model has played a greater role in predicting China' growth rate. China has always emphasised on capital formation as a primary factor for growth. Economic growth had an added advantage of structural change which has increased the productivity. Conditional convergence is prominently visible in china and other countries growth phenomenon. And one more crucial aspect on which china focussed was the restrictive population policy with low population growth rate.
The reasoning behind China's slowdown witnessed recently has been widening rural-urban gap, diminishing returns to scale and export ortiented growth model.