Solow Model Flashcards
1
Q
Demographic Equation
A
N’= (1+n)N
2
Q
Constant Savings Rate
A
C+S=Y
3
Q
Production Technology
A
Y=zf(K,N)
4
Q
Investment Technology
A
K’=K-dK+I
K’= I+(1-d)K
5
Q
Goods Market Equilibrium
A
Y=C+I
Y=C+S
S=I
6
Q
Capital Market Equilibrium
A
S=I
I=sY =szF(K,N)
7
Q
Rearrangement of K’
A
K’= I+(1-d)K
K’= S+(1-d)K
K’= sY+(1-d)K
K’=szf(K,N) + (1-d)K
8
Q
Law of Motion of Capital per Worker
A
K
k’= szf(k)/(1+n) + (1-d)k/(1+n)
9
Q
Break Even Investment
A
(n+d)k*
10
Q
Actual Investment
A
szf(k*)
