Solows main contribution is an elaboration of neoclassical growth theory. Factor accumulation and technological growth are also exogenous. Dynamic general equilibrium model the model is only as good as its assumptions. Constant rcturns to scale seems the natural assumption to make in a theory of growth. What drives an increase in gdp per capita in a long run. His first pioneering work was the article a contribution to the theory of economic growth 1956, in which he developed a neoclassicaltype mathematical model of longrun growth based on criticisms of the keynesian harroddomar. A contribution to the theory of economic growth robert m. Skip to main content switch to mobile version warning some. A contribution to the theory of economic growth by robert m. The model predicts that steady state level of income per capita is exogenously determined by savings and population growth rate, which lead to the view of. Technical change and the aggregate production function. Production function, with physical capital k, labor l and knowledge or technology a.
A contribution to the theory of economic growth, qje. It is here drawn to pass through the origin and convex upward. Assumptions savings and investment decisions are exogenous no individual optimization. The solow growth model shows how saving, population growth, and technological progress affect the level of an economys output and its growth over time 186 187. This amounts to assuming that there is no scarce nonaugmentable resource like land.
Library for solving, simulating, and estimating the solow 1956 model of economic growth. Hence the production func tion is homogeneous of first degree. Solow assumed diminishing marginal returns of capital, exogenous population growth and savings rate, no depreciation and technological progress. Pdf dynamic extensions of the solow growth model 1956. A contribution to the theory of economic growth authors.