11.2 Classical Economic Growth Theory ⊙ Presumption3 GDP is the function of labour and capital Y=F(L, K) OF O-F 0: FLL OL OFO 02F IFK aK KK OK2SO 复表经济学院
11.2 Classical Economic Growth Theory Presumption 3 ❖GDP is the function of labour and capital； 0; 0 0; 0 ( , ) 2 2 2 2 = = = = = K F F K F F L F F L F F Y F L K K KK L LL
11.2 Classical Economic Growth Theory ⊙ Presumption4 .s Income equals to payout i' social gross saving is effectively used to invest a The change of the interest can be effectively used to adjust save, investment, taxes and government purchase S+t=l+g 复表经济学院
11.2 Classical Economic Growth Theory Presumption 4 ❖ Income equals to payout； Social gross saving is effectively used to invest； The change of the interest can be effectively used to adjust save 、investment、taxes and government purchase S +T = I +G
11.2 Classical Economic Growth Theory o supposition .o In the period of t, saving rate is constant to be s i a St is a part of the gross products, and is determined by the saving rate a The total save equals to the investment: It In every period the It is the change of capitals dk S=SY=l dt 复表经济学院
11.2 Classical Economic Growth Theory supposition5 ❖ In the period of t，saving rate is constant to be s； St is a part of the gross products, and is determined by the saving rate； The total save equals to the investment : It ； In every period the It is the change of capitals。 dt dK S sY I t = t = t =
11.2 Classical Economic Growth Theory o Harrod-Domar growth model ÷ Basic supposition a Labour and capital can be substituted by each other One unit of product needs a unit labour and v unit capital L K 复表经济学院
11.2 Classical Economic Growth Theory Harrod——Domar growth model ❖ Basic supposition Labour and capital can be substituted by each other； One unit of product needs a unit labour and v unit capital min{ , } v L K Y t t t =
11.2 Classical Economic Growth Theory o Isoquant curve in the product function K e Y2 B 2 e A 复表经济学院
11.2 Classical Economic Growth Theory L K v Y1 Y2 Y3 e1 e2 e3 B A v Isoquant curve in the product function：