Globalization, Divergence and Stagnation



use (7) to substitute for Wn■ Rearrange it to get:

p(i)1 e


Φn (i) LnAn (i)σ
_ r fθ an (j Γ dj

use an(j) = an (i) [⅛⅛J] /(   σ

to elimnate An («)■ Integrate i over the interval


[0,1], use (3) and rearrange:

r = |(LNr jθ φN (i)


-∣ 1— σ
σ

1-σ di


+ Ls)σ J1 Φs (i)


σ

1-σ di


- 1σ ^Vσ


Finally, use (22) to substitute for fj t Φs (i)σ^1 σ^ di^ The Euler equation g = r ρ
then yields equation (23) in the text

35



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