Questions tagged [solow]

Referring to the Solow-Swan model of economic growth.

Filter by
Sorted by
Tagged with
1
vote
1answer
38 views

Attributing Labor Productivity Gains to Capital Deepening vs. Total Factor Productivity Growth

In a traditional Solow-Swan growth model, you can decompose growth in labor productivity (output/hour) into a component stemming from total factor productivity growth and another stemming from capital ...
1
vote
1answer
24 views

Are business cycle fluctuations usually studied in a (New Keynesian) DSGE model, or can they also be studied in a growth model?

I wonder if business cycle fluctuations are usually studied in a (New Keynesian) DSGE model, or can they also be studied in a growth model?
1
vote
1answer
59 views

Solow model and economic interpretation of $\dot{K}=sY(t)$

I am reading Robert Solow's 1956 paper, entitled 'A Contribution to the Theory of Economic Growth'. I am trying to understand the economic interpretation of the differential equation $$\dot{K}=sY(t),$$...
2
votes
1answer
137 views

The Solow model and his 1956 paper

Reading through Robert Solow's 1956 paper, entitled "The Theory of Economic Growth", I was hoping to find his fundamental difference equation. I was wondering if the following equation is indeed that ...
4
votes
2answers
52 views

“If markets are competitive, the rate of return on capital equals its marginal product, $f'(k)$ minus depreciation $\delta$”?

Consider Solow model with $Y=(AL)^{1-a}K^a$. Then output per effective labor is $y=k^a$ where $k=\frac{K}{AL}$. "If markets are competitive, the rate of return on capital equals its marginal product,...
0
votes
0answers
23 views

In Solow growth model, increasing consumption drops production which should measure GDP?

Consider Solow growth model $Y=F(K,AL)$ where $A$ measures knowledge progress, $K$ is capital and $L$ is label. I have suppressed temporal dependence. I am going to assume $L$, $A$ grow exponentially ...
1
vote
0answers
27 views

Solow model: effect on a sudden fall in population? [closed]

my question is, what happens in the Solow model when a sudden fall in population happens? let's say a bomb killed many people.
0
votes
1answer
23 views

Is the steady state of k enough to show Y grows at the rate n+g?

To provide some context for the question: I was approached by a student needing help for a an empirical thesis based on Solow-Swan model. She had trouble solving the theoretical model she wanted to ...
1
vote
0answers
21 views

How to derive and draw phase diagrams: Ramsey-Cass Koopmans model

I am confused by how to construct phase diagrams. For instance, I have been given the following two equations from the Ramsey model: \begin{align*} \frac{\dot C}{C}=&\frac{1}{\gamma} (F_K(K) - \...
0
votes
0answers
14 views

How does identical capital-output ratios imply identical rental prices of capital?

In the context of the Solow model, I need to show that if two countries have the same capital output ratio then they have the same rental prices of capital (they have same production functions). I ...
0
votes
0answers
32 views

Which model gives a more accurate representation of growth?

Does the Solow model or the combined Romer - Solow model give a more accurate representation of growth?
-2
votes
1answer
26 views

Steady state growth of output

In the long run Solow steady state, the growth rate of output in a country is g + n. If there is some other country with exactly the same properties of the first country and the same initial ...
0
votes
0answers
22 views

Solow growth model on firms level

Probably a silly question, but I just have to make sure. I am wondering whether it is acceptable to use the solow / solow-swan growth model to model the growth of firm instead of growth of an economy?
0
votes
0answers
18 views

Solow's growth model with human capital (mankiw (1992) footnote 12 style equation)

i've never seen this type of model with human capital, and the derivatives of K and H seem to be different than what I find in literature about the subject. It's similar to mankiw romer weil (1992) ...
-3
votes
1answer
36 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 ...
2
votes
1answer
178 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 ...
3
votes
1answer
187 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.
1
vote
2answers
102 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 ...
-1
votes
1answer
35 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
69 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 $\frac{y'_t}{y_t}= \frac{1}{3K_t}$...
1
vote
1answer
259 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 '...
0
votes
1answer
141 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
votes
0answers
426 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'...
1
vote
1answer
200 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 ...
1
vote
0answers
183 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 ...
1
vote
0answers
55 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 ...
3
votes
0answers
184 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 ...
-1
votes
1answer
139 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 ...
2
votes
1answer
2k 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 ...
5
votes
1answer
58 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
votes
1answer
72 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?
4
votes
1answer
774 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 ...
0
votes
1answer
7k 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 ...
3
votes
3answers
4k 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 goes into ...
1
vote
2answers
360 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=...
1
vote
1answer
126 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) ...
3
votes
2answers
827 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 ...
1
vote
1answer
58 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 ...
1
vote
1answer
452 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, ...
0
votes
1answer
841 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 ...
4
votes
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
1answer
86 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 ...
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 ...
1
vote
0answers
31 views

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. ...