The Model Of Economic Growth - 1751 Words

‘The framework presented here is based on the notion of population increase’ (Bucci 2009) with attention to the solow model and the AK model of economic growth. The differences and similarities in these growth models will be critically assessed with the use of empirical evidence to explain the real world economic growth patterns. The solow model is ‘a theory that analyses growth as being driven by exogenous technological change and the accumulation of factors of production’ (burdawyplosz 2013 p561). ‘The AK model is an endogenous growth model it explains the sustainable by exogenous technological advances . It tracks down the sources of economic growth to the accumulation of factors of production with particular emphasis on knowledge.’ (Burda 2013 p551). Economic growth on the other hand refers to the ‘increase in the capacity of an economy to produce goods and services.’ It can be measured in nominal terms, which include inflation, or in real terms, which are adjusted for inflation (Investopedia 2014). GDP (Gross domestic product) which is ‘the monetary value of all the finished goods and services produced with a country’s boarders in a specific time period’ (annually) (Investopedia 2014) GDP is used when comparing economic growth between countries as these take into account population differences between countries’ (Investopedia 2014). Population growth is the increase in the number of people in a country, state or city. The formulae for population growth is (BirthShow MoreRelatedThe Growth Model And Economic Growth1072 Words   |  5 PagesEndogenous growth model, it clarifies long-run economic growth as radiating from economic activities that make new technological knowledge. Endogenous growth can be explained as long-run economic growth at a rate dictated by factors that are internal to the economic framework, especially those factors administering the opportunities and motivators to create technological knowl-edge. Over the long run, the pace of economic growth, as determined by the output per individual growth rate, reliesRead MoreThe Model Of Economic Growth1346 Words   |  6 Pagesthe Solow Model of economic growth, which assumes the neoclassic production function of decreasing returns to capital. Solow proposed the model while considers the rate of saving and population growth as exogenous and demonstrated that the countries reach the steady state level of income per capita. However, the classical Solow model is not able to explain cross-country variation in the standard of living. The Solow model predicts the effect of saving and population growth on economic growth qualitativelyRead MoreThe Economic Model Growth Of Energy1057 Words   |  5 PagesEnergy is one of the main drivers of economic and social development. Years ago, the only uncertainty was the price of oil. Now the concern is if the current economic model growth is reasonable in a world with limited energy resources. This has lead to more research in other forms of resources of energy. Now we have other unconventional resources such as wind, solar, geothermal, water, and so on. Energy demand is set to double by 2050 (Beckman, 2013). Therefore, greenhouse gases could double byRead MoreA Model Of Sustained Economic Growth1720 Words   |  7 Pagesintention is to develop a model where sustained economic growth is the product of the alternation of numerous agents and this literature will provide insights to reasons for variations in Gdp growth during the recessionary period(2008-2013) in Europe while investigating the optimising agents which had significant impact on Gdp growth rate. The Solow growth(1956) hypothesis looked for the determinants of sustainable economic development in per capita gross domestic product. The model recognized three principalRead MoreThe Theory Of Economic Growth Model2281 Words   |  10 Pagesnotice vast differences in average real incomes, countries’ growth recor ds and in standards of living over times that affect living human welfare. Many model mechanisms have been used to study the worldwide growth and income differences across countries. A fundamental model that economist have used to study these issues is the Solow growth model. This essay concentrates on the analysis of this model. Firstly, the derivation of the model will be demonstrated including the needed assumptions. ThenRead MoreThe Solow Swan Model : An Economic Model Of Long Run Economic Growth980 Words   |  4 PagesSolow-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 â€Å"knowledge†. The textbook Solow-Swan model is set in continuous time where there is no internation al or government trade. The Solow-Swan model is originallyRead MoreEconomic Growth and Standard Neoclassical Model Essay812 Words   |  4 Pagescross sectional data on growth across countries shows that countries grow at different rates. Many theories try to explain this phenomenon with emphasis with capital accumulation being one of them. I will start by developing the standard neoclassical growth model as developed by Solow(1956)[1]. I will then proceed to discuss the extensions that have been made to this basic model in an attempt to better understand actual growth figures, for e.g. the standard neoclassical model cannot explain the magnitudeRead MoreThe Model Of Economic Growth Based On Production Functions1339 Words   |  6 Pages2. The model of economic growth based on production functions (the Welfens/Jasinski model and its modifications). To show how FDI influence economic growth of a particular country a model proposed by P.Welfens and P.Jasinski is used. It is based on traditional production f unctions. In general the production functionsof Welfens and Jasinski describing the economic growth in the recipient country can bedefined by the following equation[61, p.254]: (1.9) where â€Å"Y† is an output (GDP or GNP); â€Å"K†Read MoreEconomic Growth Theories and Models, A section of a Research Paper1524 Words   |  6 PagesLiterature review Classical Theory of Economic Growth Harrod Domar Growth Model The Neoclassical growth Model Empirical literature 2.1 Theoretical Literature The long history of ideas on economic growth started from the classical economists like Adam Smith, Robert Malthus, Ricardo and Marx. For more than three decades the Neoclassical and the Endogenous Growth theories were arguing and forwarding economic reasons on trend of economic growth through investment as a general and private investmentRead MoreA Brief Note On The Growth Theory And The Dual Sector Model Of Economic Development Essay3646 Words   |  15 Pages ENDOGENOUS GROWTH THEORY BY MARTIN RIITHO MAINA KCA 14/02073 A Term Paper submitted to Prof. Joseph Ongeri in fulfilment Of the requirements for the course Advanced Macro-Economics, as credit towards the degree of Master of Science (Finance and Economics) KCA UNIVERSITY November, 2014 â€Æ' TABLE OF CONTENTS Page 1.0 Abstract.†¦Ã¢â‚¬ ¦..†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦.†¦..3 1.1 Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.........................................4 2.0 Literature review: Models†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦