Questions tagged [solow]
Referring to the Solow-Swan model of economic growth.
35
questions
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Beta convergence: data uncertainties
Maybe these questions are silly for many of you but I’m trying to conduct a beta convergence analysis using data from the Penn World Table, and I have run into some uncertainties.
For the dependent ...
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1answer
32 views
Looking for help with Solow Model Question [closed]
The question is this:
Suppose there is a production function of $Q=F(K, L)=\sqrt{K}\sqrt{L}$. Suppose that MPC=0.8 and the labor force is growing at a rate of 0.05 per year. Also labor force ...
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0answers
18 views
Mankiw, Romer & Weil: Estimating Implied Alpha & Beta
I am replicating Mankiw, Romer & Weil (1992) with data from 1995 through 2015, and I wondering how they estimated the implied alpha and beta.
Thank you,
For those curious, the paper can be found....
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0answers
35 views
Log-linearization about steady state
I am working on a Solow model where:
$$ y_{t} = k_{t}^{\alpha}(Z_{t})^{1-\alpha} $$
$$ y^{*} = (\frac{s}{n+\delta})^{\frac{\alpha}{1-\alpha}} Z $$
$$ k^{*} = (\frac{s}{n+\delta})^{\frac{1}{1-\alpha}}...
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0answers
22 views
Different explanation for economic growth, depending on the length of the period considered
I'm being introduced to macroeconomics, and a colleague asked why do we say that in the short term the productivity of a country is determined by the "demand side" (IS/LM model) while in the long run ...
3
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1answer
57 views
Data Set for Mankiw, Romer, and Weil 1992
I am trying to replicate the results of Mankiw, Romer and Weil 1992, and cannot seem to find the original data.
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0answers
15 views
Importance of savings rate in the Harrod Domar and Solow models
The standard equation associated with the Harrod-Domar model is: $$ \frac s{\theta} = g^* + n + \delta $$
where, s = savings rate, $ \theta $ = the Output-capital ratio, $ g^* $is the growth in ...
1
vote
2answers
92 views
If an economy has capital that is less than the golden rule level of capital, can we reach the golden rule without increasing the savings rate?
This question is in context of this problem I was trying to solve:
The answer given is (a). But I think the answer is (C). My arguments are as follows:
First, the golden rule level of capital ...
2
votes
1answer
156 views
Wages in Solow growth model with savings = 0
I am trying to understand the change of wage rate and rental rate in the Solow growth model with s = 0. It is clear that capital per capita will approach 0 (due to depreciation of capital). Also is ...
0
votes
1answer
29 views
Here's a question about the solow model [closed]
At first, I was confused by how y keeps increasing after depreciation exceeds savings, then I finally found what was truly bothering me. The fact that when depreciation exceeds savings, capital per ...
1
vote
1answer
51 views
Growth Rate of Solow Model
Conside the following Cobb-Douglas Production Function:
$$Y_t=\bar AK_t^{1/3}\bar L^{2/3}$$
The growth rate of per capita GDP for this equation in continuous time is $\frac{y'_t}{y_t}= \frac{1}{3K_t}$...
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1answer
191 views
The growth rate in the Solow model
Consider a very simple version of the Solow model with discrete time, a fixed population size and no technological progress (a fuller description of the assumptions is outlined here). Capital is at '...
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1answer
70 views
How to Calculate the productivity multiplier?
Given a Cobb Douglas
$Y_t = A (K_t^\alpha L_t^{1-\alpha}) $
$ K_{t+1} = sY_t + (1-\delta) K_t$
How do we get the multiplier on productivity to be equal to $ \frac{1}{1-\alpha}$?
I understand ...
2
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0answers
268 views
Solow Model - criticism of Harrod model
I have started out reading seminal paper of Solow - Solow Growth model. It starts out with discussing weaknesses in Harrod Domar Model, a simple model of economic growth which featured prior to solow'...
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1answer
158 views
Solow model golden rule with my exact answer
In a perfectly competitive Solow economy with physical capital accumulation, population growth and a Cobb-Douglas production function, show that the “golden rule” steady-state would be reached if at ...
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0answers
163 views
Improve my solution: Question on solow model
There is a question about Solow growth and Ramsey model,
compared to solow model, the Ramsey model is better to explain growth patterns across countries because it predicts a slower convergence ...
3
votes
0answers
107 views
Solow growth model deriving solutions
I was reading a note on Solow model in continuous time, and it said we can derive K, C, and Y from the key equation. But the steps were omitted, and I have no clue with it. How can I derive these ...
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1answer
120 views
Sustainable growth in the long run [closed]
Suppose that, in addition to physical capital and labour, an economy requires a fixed factor and a non-renewable resource to produce the final good. Prove that an economy with these input requirements ...
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0answers
52 views
Trying to apply Solow model to the US econmy
In a textbook application I try to apply Solow model to the US economy. What will be a ballpark estimate of the saving rate and the depreciation rate?
Edit: To follow up, assume Cobb-Douglas with ...
2
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1answer
1k views
How is the Solow residual measured?
In the Solow model, we have the Solow residual often referred to as the level of technology A.
More particularly : \begin{equation} Y(t) = [K(t)]^{\alpha} [A(t)L(t)]^{1-\alpha} \end{equation}
Here ...
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1answer
55 views
Macroeconomic Measures of Human Capital
How exactly do you measure human capital for a given country and what numbers are included in that measure.
The reason why I ask is because im interested in simulating the Mankiw–Romer–Weil version ...
2
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1answer
70 views
Was there a Role of Technology in Macroeconomic Models before Solow?
Was the role of technological progress formalised by Solow (1956) for the first time? or at least he provided the initial formal insight into the role of technological progress in economic growth?
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1answer
535 views
Solow growth model - analytic proof that Inada conditions imply steady state capital is increasing in the savings rate
Let's take the example of a generic Harrod-neutral (labor-augmenting) production function $f(k)$; all letters denote the growth rates they usually would. In the regular Solow growth model with the ...
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1answer
6k views
Effect of population growth on Solow steady state
My textbook says that:
Ratio of capital per capita to income per capita in the steady state is a positive function of s and an inverse function of η and δ. Thus, k*/y* is a constant. This means ...
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vote
1answer
107 views
What happens to aggregate C, K, and Y when TFP increases permanently?
I was wondering what would happen to aggregate capital, consumption and output (i.e. K, C, Y) in the Solow model with constant population growth (i.e. n > 0) and no technological growth (i.e. a = 0) ...
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votes
2answers
685 views
Basic Solow Growth Model: Stability Proof
I am reading through McCandless "The ABCs of RBCs" this summer to get a preview of what I need to know for the coming Fall semester. It did not take long to find a statement that I can easily accept ...
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1answer
52 views
How to estimate a constant elasticity of substitution for a country in a solow model including human capital and scarce resources
For my thesis I was looking for some help due to the facts of my little knowledge of econometrics. I appreciate any help whether its directly dealing with my question or literature advice.
Basically ...
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vote
1answer
378 views
Taylor Series Approximation around steady state in Solow
In my Advanced Macro script, the professor says take TSA1 of the following equation:
$(1+g)(1+n)k_{t+1} = sk^\alpha_{t+1} + (1-\delta)k_t$
where $g$ is technological progress, $n$ population growth, ...
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1answer
570 views
Taking the derivative of capital per effective unit of labor in the Solow model [closed]
I'm taking an intro macro course, and my calculus is pretty rusty. I'm going through some lectures notes right now where they derive the growth rate of capital in the Solow model like so:
I'm ...
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vote
1answer
78 views
Growth regressions over 3-year periods; regressors in average or year values?
Say that I want to estimate a growth regression basically similar to the Augmented Solow Model one, except my dependent variable is not Y/L, but it's the average GDP growth over a 3-year period. As my ...
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votes
3answers
3k views
Alpha interpretation in Solow growth model
Consider the Solow model (without technology):
$Y = F(K, L) = K^\alpha L^{(1-\alpha)}$
What's the economic interpretation of $\alpha$? Prove and argue the result.
I see it as a share that ...
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2answers
1k views
Steady state Solow model with exogenous technological change
Consider the following question:
So, assume the standard function for production:
$$Y_t = A_t K^\alpha_tL^{1-\alpha}$$
where $L$ is fixed.
Then, the growth rate of output is:
$$g_Y \approx g_A + ...
1
vote
2answers
345 views
Solow model, time and steady state
Suppose we have a Solow model:
$$
Y(t)=C(t)+I(t)
$$
$$
I(t)=sY(t)
$$
$$
\dot K=I(t)-δK(t)
$$
With a given Cobb-Douglas:
$$
Y(t)=Z(t)K^aL^{1-a}
$$
$$
y(t)=Y(t)/L(t)
$$
$$
k(t)=K(t)/L(t)
$$
$$
y=...
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0answers
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Growth accounting: technological progress grows at near zero rate
In a growth accounting exercise I backed out the time path of technical progress augmenting a factor. Annual growth rate of this factor saving innovation is very close to zero in the last few years. ...
3
votes
1answer
4k views
Capital stock depreciation rate, how to calculate?
I am trying to work out the depreciation rate using the following information, it is an extract from a longer data set on capital stock:
Just wanted to find out what the rate of depreciation is for ...
