Question

Prove that in the generalized model of Solow, the ratio of total capital to production is constant.

Answer 1

GENERALIZED MODEL OF SOLOW:

The generalized Solow-Swan model is states that "To study the exogenous impact of population, saving rate, technological change, and labor participation rate on economic growth".

1. When the generalized model is introducing generalized exogenous variables into the classical Solow-Swan model, we obtain a nonautomatic differential equation.
2. It is proved that the solution of the differential equation is asymptotically stable if the generalized exogenous variables converge.
3. It does not converge when one of the generalized exogenous variables persistently oscillates.

4. The classical Solow-Swan model is given bywhere , and  are saving rate, population growth rate, and the technological change rate, respectively, and  is the intensive production function satisfying

   SOLOW Equation is:

= S F(K) - (+n+g)k

Where,

S=Saving rate

n=population growth rate

  g =technological change rate

F(K)= Intensive production reaction