Y t a tk l1 so output y t is a function of productivity a t, physical capital k t, and labor l t at time t. A free powerpoint ppt presentation displayed as a flash slide show on id. Growth accounting solow residual 1 1 growth accounting lets assume a standard cobbdouglas aggregate production function. Stay connected to your students with prezi video, now in microsoft teams. The working paper series can be downloaded free of charge in pdf format from. R is homogeneous of degree m in x 2 r and y 2 r if and only if g. Ppt os res powerpoint presentation free to download id. The solow residual is a number describing empirical productivity growth in an economy from year to year and decade to decade. Solow model regarding the fact it was a single factor model where the sole growth factor was capital accumulation. The solow residual is a number describing empirical productivity growth in an economy from. The design of dynami c links in certain numerical models employed in general equilibrium analysis has also been based on solow s model. But, above all, solow s growth model constitutes a framework within which modern macroeconomic theory can be structured. Chapter 2 the solow growth model and a look ahead 2. Solow abandoned the standard keynesian assumption of a fixed ratio between production factors and introduced a ratio variable.
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