Suppose the parameters of the Romer model (the no-capital version) take the following values: A¯ 0 = 100, ¯` = 0.10. ¯z = 1/500, and L¯ = 100.
(a) What is the growth rate of output per person in this economy?
(b) What is the initial level of output per person?
(c) What is the level of output per person after 100 years?
(d) Consider the following changes, one at a time: a doubling of the initial stock of knowledge, a doubling of the research worker proportion, a doubling of research productivity, and a doubling of the population. In each case, how would your answers to parts (a), (b), and (c) change? (e) If you could advocate one of the changes considered in part (d), which would you choose? Briefly state why you would choose this change.