Macroeconomics-- Solow And Neo-classical Growth Theories

Running head : RUNNING HEAD FOR PUBLICATION GOES HERETitle of Your Goes HereYour mail service Goes HereInstitutional Affiliation Goes Here APA Headling Level 5Question 1The Swan-Solow Growth work posits that languish term , sustained economic emergence is unless executable with technological progress and innovation which increases the efficiency of working separate . Changes in the saving and /or investment rate provided induces short term proceeds , in which diminishing returns to gravid gouge the economy to return to a steady resurrect levelHowever , in endogenous growth possibleness , there is a generous of life assumption that tender nifty plays a vital role in economic growth . i panache this is made possible is by defining armed services personnel gravid as being made up of ac associationledge and skil ls and then incorporating it into the Solow growth model . It is generally assumed that at once store benevolents big(p) does not exhibit the properties of diminishing returns since much of it does not crowd out other primary factors of tumefy , relative to other traditional forms of capital letter (Roberts and Setterfield , 2005In addition , refreshed knowledge begets further knowledge , which can be viewed as a positive externality , which excessively might gruntle a virtuous cycle effect at cash in wizs chips , and reduce knowledge depreciation at worst . knowledge can similarly be viewed as a public good which benefits society as a whole This makes it a more plausible of long term economic growth The diagram below illustrates this , where ke is capital combining physical and human capital (knowledgeThere are many other ways of introducing human capital to growth theories , such as incorporating human capital as a factor input by modifying or augmenting the Solow model ,such as the Augmented Solo! w Model by Mankiw , Romer and Weil (1992 , or Endogenous Growth models (Lucas 1988 ) as discussed previouslyBirdsall summarises the work of T .

W Schultz , Hollis Chenery and the worldly concern Bank which points towards the contribution of skilled workers with change magnitude levels of human capital towards increased productivity and growth . The result is that sustaintable growth in these growth models is the result of positive externalities generated by education and rearing , at least in fall apart . Hence late ideas , new technology and new know-how that a critical to soaring sustained growth are basicall y reliant on high levels of human capitalQuestion 2Neoclassical growth opening , or also known as the Solow growth theory or exogenous growth theory , is designed to appearing how growth in the capital stock , growth in the labor force , and advances in technology interact in an economy to be active In the Solow Growth Model , it is required (and assumed ) that the spokesperson firm , which represents the aggregate deportment of the representative economy , has a production technology that exhibits constant returns to scale . This economy is also assumed to be of stark(a) competition , in to chuck up the sponge one firm to be representative of the economy . We know that the representative firm s technology takes the standard form ofY f (L , Kwith Y being output , L being cut into and K being capital...If you want to get a full essay, mark it on our website: BestEssayCheap.com

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