The worst explained reading in CFA II??

[hacky]

Absolutely the reading about the neoclassical model…. it’s totally a mess!!! Half demonstrations … “we take this and that and we get another completely different thing!”
How??? If you don’t explained do not even start the demonstration, just give me the final formula!
Concepts not explained…
Assumptions of the model not explaines…
Just be curious who is the completely incompetent that wrote this! Please for God’s sake change job in your life!

 

[S2000magician]

I wrote an article on neoclassical growth theory that may be of some use: http://financialexamhelp123.com/neoclassical-growth-theory/

 

[hacky]

What I don’t understand is when it says:
“So far we have focused on the steady state growth path. What happens if the economy has not yet reached the steady state? During the transition to the steady state growth path, the economy can experience either faster or slower growth relative to the steady state. Using Equations 6, 7, and 9, we can write the growth rates of output per capita and the capital-to-labor ratio as, respectevely
delta y / y = theta / (1-alpha) + alpha * s (Y/K - psi)”
If you say “…Using Equations 6, 7, and 9 …) YOU MUST SAY HOW!! Otherwise just give me a bunch of formulas to memorize…

 

[onlysimon]

hacky wrote:
Just be curious who is the completely incompetent that wrote this! Please for God’s sake change job in your life!

http://www.cfainstitute.org/programs/cfaprogram/Documents/cfa_program_cu...
Economics(8th ed.,by Parkin,Addison-Wesley,2008) replaced a textbook by Gwartney and Stroup
by all means use the Gwartney book, I don’t have it, but have used it before.
(title is Economics: Private & Public Choice )

 

[hacky]

I found the book but it’s about microeconomics and I didn’t find the Solow model

 

[onlysimon]

ok I found it now..
book is Economics for Investment Decision Makers By Christopher D. Piros CFA, Jerald E. Pinto
page 670-671. it is verbatim the same. searchable in google books.
the chapter was written by Paul Kutasovic, but it’s not mentioned in his bio.
http://www.nyit.edu/management/personnel/individual_faculty/paul_kutasovic
(sorry doesn’t help - I’m just as interested as you now..)

 

[hacky]

Ok I did it…
a) insert equation 7 inside equation 6
b) get n or delta from equation 9
c) insert the result of the second step in the first step…
However I think that:
_considering the amount of material,
_considering that this is not a PhD,
proof should be fully explained, at least in the appendix. I can’t lose hours on this and i don’t like to learn just memorizing…WHO WROTE THIS DID REALLY A BAD BAD BAD BAD JOB!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[onlysimon]

genius, but i get a delta A/A left?
(6)
delta y / y = delta A/A + alpha * delta k / k
(7)
delta k / k = s * Y / K - smalldelta -n
step a - insert (7) inside (6)
delta y / y = delta A/A + alpha * s * Y / K - smalldelta -n
(9)
Y/K = psi = (1/s)[( theta/ 1-alpha) + smalldelta + n ]
step b - solve for smalldelta and n
smalldelta + n = psi * s - (theta/1-alpha)
step c - plug b into a
delta y / y = delta A/A + alpha * s * Y / K - psi * s + (theta/1-alpha)

 

[hacky]

Attention that it is:
delta y / y = delta A/A + alpha * (s * Y / K - smalldelta -n)
so later you get:
delta y / y = delta A/A + alpha * (s * Y / K - psi * s + (theta/1-alpha))
Now multiply everything by alpha inside the parentheses, and after collect “s * alpha” and sum the theta terms and you get it!

 

[hacky]

PS as it’s written in the book:
delta A/A = theta