Calibrate the simple growth model as below: max [log (c) + log(1 − 4)] {Ct,lt} s.t. Ct + xt = Yt xt = kt+1 (1-6) kt Yt = kall-a with the following information of real economy: in the long run, on average, the investment-capital ratio is 0.1; the capital income share in GDP is 0.4; the average working hours per day is 8, that is a third of one day; the capital-output ratio is 4; and the consumption-output ratio is 0.7. That is to find out the values of {3, 6, &, a} that make the model consistent with the real economy. Note that you have to list all the details of induction. (15 points) Hint: The key is to match the model steady state moments with real economy ratios through appropriate equations. t=0
