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- Y = A(K, L, Debt, H) (2) where Y, K, L, H, debt and A are the measure of GDP, capital stock, labour force, human capital public debt and other constant factors, respectively. This makes a standard assumption in the equation that input elasticities of output are constant and technical change is neutral. To begin, by the behaviour of a firm in economy as proposed by Yakita (2008) is applied. Firms Let assume that there are i firms. The production function of the firm can be written in the following form.
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