980 WordsNov 13, 20144 Pages

Qualitative Analysis
The Solow-Swan model is an economic model of long-run economic growth in neoclassical economics. The model was developed by Robert Solow and Trevor Swan, independent of each other in 1956. This model is sometimes referred to as simply the Solow model, or the Neoclassical Growth model. The model focuses on four variables: output or GDP, capital, labor, and “knowledge”. The textbook Solow-Swan model is set in continuous time where there is no international or government trade.
The Solow-Swan model is originally an extension of the Harrod-Domar model, which is what the two economists Solow and Swan derived their function from. They extended the model by adding labor as a factor of production, and capital-labor ratios are no longer fixed which made the Solow-Swan model stable compared to the unstable Harrod-Domar model.
Today the Solow model is used by economists to estimate the separate effects on economic growth of technological change, capital and labor. Additionally, the model has been used to help explain growth differences between countries and help address economic growth issues.
Quantitative Analysis
There are many assumptions that go into the Solow Model since it is a model in a pure production economy. We assume that all people work all the time, there is no leisure choice.

Related

## Neoclassical Theory Of Keynesian Theory

1578 Words | 7 Pages(UK) view of Keynesian economics? Intro The Neoclassical-Keynesian synthesis contains theoretical principles and ideas from both the Neoclassical school of economic thought and Keynes’ General Theory. The UK Cambridge Post Keynesian view of economics also contains elements from both these schools, yet the Neoclassical Keynesian synthesis and the UK Cambridge Keynesian bodies of economic thought differ in their views, methods and ideas. The two schools utilise different models to reach the similar

## The Theory Of Economic Growth Theory

1703 Words | 7 Pagesimportant and popular issue in the field of economic research, it attracts many economists and there are many models to explain economic growth. In the history of the development of economic growth theories, there are three important stages which are the Classical Growth theory, the Neoclassical Growth theory and the Endogenous Growth theory. To start with, the Classical Growth theory is based on the Keynesian theory and the representative one is the Harrod–Domar model. It was put forward by Roy F. Harrod

## The Reserve Deposit Ratio Affects The Level Of Money Supply Essay

1571 Words | 7 Pagesof Okun’s Law. 2. AD-AS Model Consider the AD-AS model discussed in lectures. Suppose the economy begins in a short run equilibrium with output equal to potential. (a) Illustrate this situation in an AD-AS diagram. What is the initial level of cyclical unemployment? (2 marks) As shown in the AD-AS model above, the output is equal to potential output in short run equilibrium. Hence, the business cycles are at their highest where economic production is being maximised. Therefore

## Neo Classical Model

1134 Words | 5 PagesNeo classical theory: An economic theory that outlines how a steady economic growth rate will be accomplished with the proper amounts of the three driving forces: labor, capital and technology. The theory states that by varying the amounts of labor and capital in the production function, an equilibrium state can be accomplished. When a new technology becomes available, the labor and capital need to be adjusted to maintain growth equilibrium. This theory emphasizes that technology change

## The Effect Of Population Growth On Solow Growth Model

1532 Words | 7 PagesThe effect of population growth on Solow Growth model I. Introduction In order to study the economic growth, many economists had established a large number of economic growth model. In 1948, Roy Forbes Harrod (an economist in UK) and Evsey David Domar (the economists in US) propounded a economic growth model together. It called Harrod-Domar Growth Model. But Some Western scholars believe Harrod-Domar Growth Model overly pessimistic. And it does not fit the fact of the development of capitalism

## The Effects Of Population Growth On The Steady State Of The Solow Growth Model

1502 Words | 7 PagesThe effects of population growth on the steady-state of the Solow growth model INTRODUCTION As the creation of neo-classical economic growth model pioneer, Solow growth model creates a new breakthrough in terms of the theoretical model in the reality and plays an important role in study in long-run economic growth model. The main purpose of this paper is to discuss the effects of population growth on the steady-state and growth rates of the Solow growth model. The structure of this essay is

## Solow Model Essay

3120 Words | 13 Pagesof the Solow model? Discuss with reference to theory and evidence. The Solow Model, also known as the neoclassical growth model or exogenous growth model is a neoclassical attempt created in the mid twentieth century, to explain long run economic growth by examining productivity, technological progress, capital accumulation and population growth. This model was contributed to by the works of Robert Solow, in his essay ‘A Contribution to the Theory of Economic Growth’ and by Trevor Swan in his

## History Of Japan And West Germany

1076 Words | 5 PagesJapan and West Germany became global economic powerhouses in a few decades after both having lay in ruins. Japan became the second largest economy in the world after the United States in 1968, experiencing average growth of up to 9% per year between 1955 and 1973. The German “Wirtschaftswunder” economic miracle accelerated even faster, transforming West Germany into the second largest economic powerhouse by the 1950s. The fact that West Germany received $1.3 billion in aid for reconstruction from

## The Causality Of Foreign Direct Investment And Economic Growth

1860 Words | 8 PagesTesting the Causality Between Foreign Direct Investment and Economic Growth Ned R Jackson Utah Valley University March 2015 Abstract This paper looks to determine the causality of foreign direct investment and economic growth. Implementing common and basic econometric techniques to test the association between these two topics in The United Arab Emirates. In past research it has been implicated that FDI has causality in economic growth mainly due to the ability FDI has to introduce new technology

## The Long Run Causality Direction Between Financial Markets Development And Economic Growth

1716 Words | 7 PagesThis thesis investigates the long-run causality direction between financial markets development and economic growth in Croatia, Slovenia, Serbia and China for varying time periods using VAR models and Granger Causality methods. It also explores the interrelationships between variables using the Impulse Response Function. Financial industry consists of two main parts; debt and equity (Krugman and Obstfeld, 2009). These are also called debt and equity markets. Credit markets which are primarily consisted

### Neoclassical Theory Of Keynesian Theory

1578 Words | 7 Pages### The Theory Of Economic Growth Theory

1703 Words | 7 Pages### The Reserve Deposit Ratio Affects The Level Of Money Supply Essay

1571 Words | 7 Pages### Neo Classical Model

1134 Words | 5 Pages### The Effect Of Population Growth On Solow Growth Model

1532 Words | 7 Pages### The Effects Of Population Growth On The Steady State Of The Solow Growth Model

1502 Words | 7 Pages### Solow Model Essay

3120 Words | 13 Pages### History Of Japan And West Germany

1076 Words | 5 Pages### The Causality Of Foreign Direct Investment And Economic Growth

1860 Words | 8 Pages### The Long Run Causality Direction Between Financial Markets Development And Economic Growth

1716 Words | 7 Pages