The Sources of Growth and the Solow Model

These flashcards cover key concepts related to economic growth and the Solow model as discussed in the lecture notes.

Solow Growth Model

A model developed by Robert Solow to explain how saving rates and population growth influence capital accumulation and economic growth.

Cobb-Douglas Production Function

A functional form of production that expresses output as a function of capital and labor, showing constant returns to scale.

Per-Worker Production Function

Function representing output per worker in relation to capital per worker.

Steady-State Level

The level at which capital per worker and output per worker stabilize in the Solow model.

Convergence

The process where economies with different initial levels of income grow towards similar income levels.

Capital Dilution

A decrease in capital per worker due to increasing population and labor force.

Golden Rule Level

The level of capital per worker that maximizes consumption in the long run.

Saving Rate (s)

The fraction of income that is saved rather than consumed.

Depreciation

The reduction in value of capital over time due to wear and tear.

Total Factor Productivity (A)

A measure of productivity that accounts for the effectiveness of both labor and capital in producing output.