solow growth model describes what

Expert Solution

Robert solow gives model in economics which in simple words says that growth of an economy majorly depends upon the proper adding of capital and inputs and as well as new technology from ideas.

He wins nobel prize in 1987 for his cintribution in neo classical economics

So he describes how the future saving,technological change ( whether growing or degrading) and population affect the growth and output

He uses cobb-Douglas function to explain it in terms of inputs.

Rahul Sunny answered 2 years ago

What drives economic growth in the Solow model? What reduces economic growth in the Solow model?

Which of the following is true about the Solow Growth Model? a. In the Solow Growth...

Which of the following is true about the Solow Growth Model? a. In the Solow Growth model consumption per person always rises as k rises b. At a steady state the economy keeps growing with aggregate K, Y, C for example all rising over time c. At steady state the following condition must always hold at k*: sy=(n+d)k d. When the economy is below steady-state level of capital-per-worker then savings per worker is higher than breakeven investment e. Golden rule...

What is balanced growth in the Solow growth model? Is it true in the real world?...

What is balanced growth in the Solow growth model? Is it true in the real world? Give an example. Use the Solow growth model to explain the following statements (assume the model with no technological change and no population growth): for a given production function and depreciation rate, the saving rate determines the level of output per worker. a higher saving rate will not necessarily generate more consumption per worker. a higher saving rate will not produce a faster steady-state...

Economic growth a. According to the Solow model of economic growth, what determines the growth rate of...

Economic growth a. According to the Solow model of economic growth, what determines the growth rate of real income per person in the very long run (steady state)? Explain. b. What public policies have been proposed to increase the rate of economic growth? Explain.

Analyse and contrast the IS-LM model to the Solow Growth Model

Question 8 Evolution of the Solow Model. In introducing constant technological growth, the General Solow Model...

Question 8 Evolution of the Solow Model. In introducing constant technological growth, the General Solow Model addressed what weakness of the Basic Solow Model. Introducing the Human Capital Model helped address what 2 weaknesses of the General Solow Model.

Discuss the dynamics of K in solow model of growth?

Solow growth model: steady state. What does it mean for the economy to be in the...

Solow growth model: steady state. What does it mean for the economy to be in the steady state? How is the steady state determined? How does steady-state output per person depend upon the investment and depreciation rates? Explain why an increase in the investment rate raises steady-state y. What are the effects of a rise in TFP or a fall in the rate of depreciation on steady-state y?

a) In the Solow growth model, capital exhibits diminishing returns. In a basic endogenous growth model,...

a) In the Solow growth model, capital exhibits diminishing returns. In a basic endogenous growth model, capital exhibits constant returns. What is the main implication of these differences to economic growth of a country/countries? b) Suppose unemployment rate in Sweden this year dropped to the lowest level ever than before. Oddly, employment rate also fell from the prior year. How was this possible?

Consider the Solow growth model with population growth and growth in the efficiency of labor. Suppose...

Consider the Solow growth model with population growth and growth in the efficiency of labor. Suppose that 2 countries A and B have the same production function given by Yt = Ktα(LtEt)1−α, the same rate of growth of E (g), the same depreciation rate of physical capital (δ) and the same saving rate s. The initial level of E, E0, is lower in country A than in country B. (a) Compare the steady-state levels of output per effective worker of...

Question