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Solow Growth Model: The Steady State

Solow Growth Model: The Steady State. = 0. Effect of Increasing the Investment Rate on the Steady State. Speed of Convergence to the Steady State. k ss = (A γ / δ ) 1/(1- α ). Δ k/k = γ Ak ( α -1) – δ = γ Y/k - δ. Predicted Versus Actual GDP per Worker.

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Solow Growth Model: The Steady State

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  1. Solow Growth Model: The Steady State = 0

  2. Effect of Increasing the Investment Rate on the Steady State

  3. Speed of Convergence to the Steady State kss = (A γ/ δ) 1/(1-α) Δk/k = γAk(α-1) – δ = γY/k - δ

  4. Predicted Versus Actual GDP per Worker

  5. Relationship Between Income per Capita and Population Growth

  6. The Malthusian Model • Fixed land • Decreasing returns • to labor

  7. Breakdown of the Malthusian Model in Western Europe:KAPITALism

  8. The Solow Model Incorporating Population Growth Δk = γy – nk - δk  kss = [A γ/(n + δ) ] 1/(1 – α) yss = A 1/(1 – α) [γ/(n + δ) ] α/(1 – α)

  9. Mortality Transition:Life Expectancy in Developed Countries Life Expectancy in Developing Countries

  10. Fertility Transition: Total Fertility Rate in the United States, 1860–2005

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