What drives an increase in gdp per capita in a long run. A contribution to the theory of economic growth robert m. Solow assumed diminishing marginal returns of capital, exogenous population growth and savings rate, no depreciation and technological progress. Library for solving, simulating, and estimating the solow 1956 model of economic growth. Dynamic general equilibrium model the model is only as good as its assumptions. A contribution to the theory of economic growth by robert m. The theory of economic growth 67 that it shows constant returns to scale. His first pioneering work was the article a contribution to the theory of economic growth 1956, in which he developed a neoclassicaltype mathematical model of longrun growth based on criticisms of the keynesian harroddomar.
Technical change and the aggregate production function. A contribution to the theory of economic growth authors. Solow has repeatedly called for the development of models that combine equilibrium and outof equilibrium outcomes or what he called a macroeconomics of the mediumrun. Constant rcturns to scale seems the natural assumption to make in a theory of growth. Assumptions savings and investment decisions are exogenous no individual optimization. The solow growth model shows how saving, population growth, and technological progress affect the level of an economys output and its growth over time 186 187. Production function, with physical capital k, labor l and knowledge or technology a.
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