Intermediate macroeconomics Lecture 6 Economic growth
Intermediate Macroeconomics Lecture 6 Economic Growth
Goal Develop the solow growth Model How much of the economy's output should be consumed today and how much should be saved for the future Static analysis( ch 3)> Dynamic
Goal ◼ Develop the Solow Growth Model --- How much of the economy’s output should be consumed today and how much should be saved for the future? ◼ Static analysis (Ch. 3) → Dynamic
The accumulation of capita 1. The supply for goods Production function Y= F(K,L) CharacteristiCs: CRS ay= F(ak, aL) Y K Per capita f(k)
The Accumulation of Capital 1. The supply for goods Production function: Characteristics: CRS Per Capita --- Y F K L = ( , ) aY F aK aL = ( , ) ( ,1) Y K F L L = y f k = ( )
The accumulation of Capital The production function y y=f(k) △ y △1 △人K
The Accumulation of Capital ◼ The production function y k y=f(k) y k y MPK k =
The accumulation of Capital 2. The demand for goods Solow model assumes that the demand for goods comes from consumption and investment only: y=C+i ∴C (1-s)y∴i=Sy=sf(k)
The Accumulation of Capital 2. The demand for goods --- Solow model assumes that the demand for goods comes from consumption and investment only: y c i = + c s y = − (1 ) i sy sf k = = ( )