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By assumption of constant returns, output is also growing at that rate. In essence, the Solow–Swan model predicts that an economy will converge to a balanced-growth equilibrium, regardless of its starting point. In this situation, the growth of output per worker is determined solely by the rate of technological progress.
In chemistry, the rate equation (also known as the rate law or empirical differential rate equation) is an empirical differential mathematical expression for the reaction rate of a given reaction in terms of concentrations of chemical species and constant parameters (normally rate coefficients and partial orders of reaction) only. [1]
An increased deficit by the national government shifts the IS curve to the right. This raises the equilibrium interest rate (from i 1 to i 2) and national income (from Y 1 to Y 2), as shown in the graph above. The equilibrium level of national income in the IS–LM diagram is referred to as aggregate demand.
In equilibrium. y d = ŷ (demand for output equals the long run demand for output) from this substitution shows that [8] ŷ/h = ŝ - p_hat That is, in the long run, the only variable that affects the real exchange rate is growth in capacity output. Also, Δs e = 0 (that is, in the long run the expected change of inflection is equal to zero)
An increase in the interest rate, from a leftward shift of the MP curve or higher level of inflation, produces lower total output, Q. The IS curve displays a negative relationship between the real interest rate, located on the vertical axis, and total output, on the horizontal axis.
But for a small open economy with perfect capital mobility and a flexible exchange rate, the domestic interest rate is predetermined by the horizontal BoP curve, and so by the LM equation given previously there is exactly one level of output that can make the money market be in equilibrium at that interest rate.
The efficient level of capital income tax in the steady state has been studied in the context of a general equilibrium model and Judd (1985) has shown that the optimal tax rate is zero. [6] However, Chamley (1986) says that in reaching the steady state (in the short run) a high capital income tax is an efficient revenue source.
A Markov process is called a reversible Markov process or reversible Markov chain if there exists a positive stationary distribution π that satisfies the detailed balance equations [12] =, where P ij is the Markov transition probability from state i to state j, i.e. P ij = P(X t = j | X t − 1 = i), and π i and π j are the equilibrium probabilities of being in states i and j, respectively ...