Productivity Parameters

patriks

Heya guys,

Now, I've been presented with what ought to be a fairly straightforward calculation; however, there is one element that is puzzling.
If one is to calculate the growth rate of an economy in a low growth steady state (poverty trap), one should use the following formula, right?

g* = 1 + γ . (ρ . θ . γ)^(θ/1-θ)

However, in this problem, you are only provided with the values for the parameter θ and the disocount factor (ρ). Without the parameter γ (productivity of educational investment), is it possible to compute this growth rate?
There most likely is a simple solution to this question; however, I would be grateful if anybody could shed some light.

Thanks!;)

Time Magazine

Where did you get that formula from? Does [latex]\theta[/latex] have an intuitive meaning?

I'm a microeconomist... have you tried setting the first derivative equal to zero? :pac: