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The Solow–Swan model or exogenous growth model is an economic model of long-run economic growth. It attempts to explain long-run economic growth by looking at capital accumulation , labor or population growth , and increases in productivity largely driven by technological progress.
In the Solow-Swan model, economic growth is driven by the accumulation of physical capital until this optimum level of capital per worker, which is the "steady state" is reached, where output, consumption and capital are constant. The model predicts more rapid growth when the level of physical capital per capita is low, something often referred ...
The 'Solow growth model' is not intended to explain or derive the empirical residual, but rather to demonstrate how it will affect the economy in the long run when imposed on an aggregate model of the macroeconomy exogenously. This model was really a tool for demonstrating the impact of "technology" growth as against "industrial" growth rather ...
In the Solow growth model, a steady state savings rate of 100% implies that all income is going to investment capital for future production, implying a steady state consumption level of zero. A savings rate of 0% implies that no new investment capital is being created, so that the capital stock depreciates without replacement.
Nobel laureate Robert Solow, credited as the founder of the modern model of economic growth, died on Thursday at the age of 99. Through his writings in the 1950s, Solow challenged traditional ...
The Solow–Swan model worked out by Robert Solow and, independently, Trevor Swan in the 1950s achieved more long-lasting success, however, and is still today a common textbook model for explaining economic growth in the long-run. [34] The model operates with a production function where national output is the product of two inputs: capital and ...
Growth accounting model calculation. The growth accounting procedure proceeds as follows. First is calculated the growth rates for the output and the inputs by dividing the Period 2 numbers with the Period 1 numbers. Then the weights of inputs are computed as input shares of the total input (Period 1). Weighted growth rates (WG) are obtained by ...
Robert Merton Solow, GCIH (/ ˈ s oʊ l oʊ /; August 23, 1924 – December 21, 2023) was an American economist who received the 1978 Nobel Memorial Prize in Economic Sciences, and whose work on the theory of economic growth culminated in the exogenous growth model named after him.