Does the Solow model or the combined Romer - Solow model give a more accurate representation of growth?

  • $\begingroup$ Well, the Augmented Solow Model (Romer - Solow) is the same as the original Solow model with the addition of human capital as a determinant of growth. This allows differences between countries with equivalent levels of capital and helps explain why investment hasn’t flowed to developing countries. The original Solow model postulates that countries with lower levels of capital have higher rates of return (closer to the origin has a higher $MPK=1+r$, think steeper). This does not seem to be supported in the data, but the Augmented Solow model accounts for this with the inclusion of human capital $\endgroup$ – Brennan Mar 5 at 15:20
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    $\begingroup$ @Brennan I think the question is about Romer(1990), not about Mankiw, Romer, Weil (1992), but the answer is similar. $\endgroup$ – Grada Gukovic Mar 6 at 7:06

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