1) a) Graphically show how it is possible that two steady states exist if a group of economies have similar rates of depreciation, population growth and technological progress. Under which conditions might the economy eventually end up in the low k steady state? Explain the intuition. b) Based on the diagram above, provide an example of group of countries that are converging to similar per capita income? Are there any studies (search in google scholar or ProQuest and cite two studies) to support your claim? (4 points)
Type your answer (one large paragraph). Draw appropriate diagram by hand if necessary, take photo and insert it.
2) https://www.wsj.com/articles/SB117462055909446522 https://www.wsj.com/articles/SB123758895999200083 a) What are foreign aid and poverty trap? What role has foreign aid played in the economic development of many African nations over the past 50 years? b) Can countries grow out of a poverty trap with the help of foreign aid? What evidence (cite two studies) is there that this is possible? (4 points)
3) Could a change in the savings rate lift the economy out of its poverty trap without outside assistance in a club economies? If yes, characterize the minimum change in the savings rate needed and use relevant diagram to demonstrate your claim. (4 points) Type your answer (one large paragraph). Draw appropriate diagram by hand if necessary, take photo and insert it.
4) Eastern European Convergence http://online.wsj.com/articles/imf-warns-eastern-european-income-convergence-hasstalled-1414134496 https://www.forbes.com/sites/stratfor/2017/09/12/central-and-eastern-europes-crisis-ofconvergence/#53ef168c67cc Based on the articles above, according to the growth models we learned, discuss critically reason for convergence/divergence in Eastern European countries (also known as transition economies). What type of convergence are they facing? (4 points) Type your answer (one large paragraph).
5) Covid-19 May Keep Developing Countries From Catching Up to Rich Ones By Jon Emont WSJ Aug 5, 2020 7:00 am ET (4 points) https://www.wsj.com/articles/covid-19-may-keep-developing-countries-from-catchingup-to-rich-ones-11596625207 In the past it seems like developing countries naturally grow faster and they can catch up with more advanced or developed economies, but recently we have seen a very different pattern.” Using absolute convergence diagram explain the catch-up effect. What are the reasons developing countries are struggling to catch up? Type your answer (one large paragraph). Draw appropriate diagram by hand if necessary, take photo and insert it.
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