1-4

Cards (21)

  • Harrod-Domar Growth Model

    A Keynesian approach to economic growth that emphasizes the roles of savings and investment
  • Harrod-Domar Growth Model

    • The growth rate of an economy depends on the level of savings and the productivity of capital investment
  • Key Concepts of Harrod-Domar Growth Model
    • Saving Rate
    • Capital Output
  • Lewis Dual Sector Model

    Describes the process of structural change in an economy, focusing on the transition from a traditional, agricultural sector to a modern, industrial sector
  • Lewis Dual Sector Model

    • Illustrates how labor moves from the low-productivity agricultural sector to the high-productivity industrial sector, fueling economic growth
  • Key Concepts of Lewis Dual Sector Model
    • Surplus Labor
    • Industrial Sector
    • Labor Transfer
    • Mechanism
  • Solow Growth Model

    A neoclassical model that emphasizes the roles of capital accumulation, labor growth, and technological progress in driving long-term economic growth
  • Solow Growth Model

    • Highlights how these factors contribute to the steady-state equilibrium where the economy grows at a constant rate
  • Key Concepts of Solow Growth Model
    • Capital Accumulation
    • Technological Progress
    • Steady-State Growth
  • Saving Rate (s) - The proportion of national income saved and invested.
  • Capital Output (k) - The amount of capital needed to produce one unit of output
  • Solow Growth Model: Capital Accumulation - Increase in capital stock due to investment
  • Labor Growth - Increase in labor force
  • Steady-State Growth - A state where the economy grows at a constant rate without changing the capital-labor ratio
  • Surplus Labor: Excess labor in the agricultural sector with zero or negligible marginal productivity
  • Industrial Sector: Modern sector with higher productivity and wages
  • Labor Transfer: Movement of labor from agriculture to industry, leading to industrial growth and increased overall productivity
  • Mechanism: As the industrial sector expands, it absorbs surplus labor from the agricultural sector. This process continues until the surplus labor is exhausted, leading to wage increases and further industrial growth
  • Authors of Harrod-Domar Growth Model - Sir Ray Harrod and Evsey Domar
  • W. Arthur Lewis - Author of Lewis Dual Sector Model
  • Author of Solow Growth Model - Robert Solow