Consider an economy where the growth rate of capital stock per effective worker is 2.5%, the productivity growth rate is 4.1%, the population growth rate is 1%, and the depreciation rate is 15%. We also assume that $a = 0.3$.

What is the growth rate of per capita output in this economy?

[Note that we are not assuming the economy is on the balanced growth path.]

Give the answer in percentage with one decimal (for example, write 99.9 if the answer is 99.91%).

To calculate the growth rate of per capita output in this economy, we need to consider the factors that contribute to the change in output per worker.
The growth rate of per capita output can be calculated using the following formula:
Growth rate of per capita output = Growth rate of capital stock per effective worker + Productivity growth rate - Population growth rate - Depreciation rate

Given the following values:
Growth rate of capital stock per effective worker = 2.5%
Productivity growth rate = 4.1%
Population growth rate = 1%
Depreciation rate = 15%
Substituting the values into the formula, we get:
Growth rate of per capita output = 2.5% + 4.1% - 1% - 15%
Simplifying the expression, we have:
Growth rate of per capita output = -9.4%
Therefore, the growth rate of per capita output in this economy is -9.4%.

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