Advanced Macro & Growth · intermediate
What moves on the Solow-Swan Growth Model diagram
Productivity shifts f(k) and s·f(k) up together, raising the steady statesteady stateThe resting point of a growth model, where capital per worker stops changing because investment exactly covers depreciation and dilution., repeated tech progress = long-run growth.
Start at the steady statesteady stateThe resting point of a growth model, where capital per worker stops changing because investment exactly covers depreciation and dilution..
Technology lifts output, and with it saving, at every capital level.
The steady statesteady stateThe resting point of a growth model, where capital per worker stops changing because investment exactly covers depreciation and dilution. itself moves out. Repeat this forever and you get sustained growth: technology is the only inexhaustible engine.
Examiners ask this as: technology growth solow, productivity frontier.
Other scenarios on Solow-Swan Growth Model