Show that an increase in a1 for group 1 workers now creates


Analyze the economy in Section 10.6 under the closed-economy assumption. Show that an increase in a1 for group 1 workers now creates a dynamic externality, in the sense that current output increases, which leads to greater physical and human capital investments in the next period.

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Econometrics: Show that an increase in a1 for group 1 workers now creates
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