LectureNotes1SolowGrowthModel.PDFVIP

Lecture Notes 1: Solow Growth Model Zhiwei Xu (xuzhiwei@sjtu.edu.cn) Solow model (Solow, 1959) is the starting point of the most dynamic macroeconomic theories. It introduces dynamics and transitions into aggregate economy. We …rst list several key assumptions regarding the model’s setup. To be consistent with future lectures, we assume that the time is discrete. The results from continuous-time model is similar. 1 Model Setup 1. Production Technology The …rm produces …nal goods by combining capital Kt and labor Lt: The pro