Emirical Analaysis of Solow-Swan Growth Model

  • Darko Lazarov
  • Risto Fotov
  • Dusko Josheski

Abstract

Long-term rate of economic growth in the Solow-Swan model is determined by exogenous (previously given) variables, and as a result, in the model, percapita variables k, c and y grow only to a point where the economy reaches the steady-state level. From this we can conclude that the Solow-Swan model provides an opportunity to grow the economy, but in the long run. To explain this fact we will use one example. Suppose that the economy is in a state where capital per worker k is below the value in the steady-state condition, in which case capital and output per worker will grow, but only along the transition path to steady-state. On the other hand, when the goods on physical capital per worker exceeds the value of capital per worker in steadystate condition, then the economy has seen a decline in capital and output per worker along the transition path to steady-state level.

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References

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Solow, Robert M. (1957) “Technical Change and the Aggregate Production Function.”Review of Economics and Statistics, 39, pp. 312-320.

Published
2013-05-20
How to Cite
Lazarov, D., Fotov, R., & Josheski, D. (2013). Emirical Analaysis of Solow-Swan Growth Model. Yearbook - Faculty of Economics, 3(1), pp.147-156. Retrieved from https://js.ugd.edu.mk/index.php/YFE/article/view/501

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