《The Neoclassical Growth Model》青少年教育文学精选.pdfVIP

1 The Neoclassical Growth Model The neoclassical growth model, which originated with the work of Solow and Swan, consists of the following relationships: a production function, y = f (h ; k ), where y is output, h is labor, and k is capital at date t t t t t t t = 0; 1; 2 : : :, plus a law of motion for the capital stock, k = (1 ¡±)k +¾y , t+1 t t where ± 2 (0; 1) is the depreciation rate and ¾ 2 (0; 1) is the savings rate. We assume that f is homogeneous of degree 1, increasing, concave, and twice continuously di¤erentiable. We assume for now that ht is constant and normalize ht = 1 (this assumption is not very accurate, but we will soon endogenize ht by letting agents choose how much time to spend working and how much to spend in other activities). Let F (k) = f (1; k). Then F 0 0, 00 0 0 F 0. We further assume that F (0) = 0, F (0) = 1 and F (1) = 0. The initial capital stock, k , is given exogenously. 0 Note that behavior is exogenous here: the representative individual in this economy simply works a …xed number of hours ht = 1, saves or invests it = ¾y , and consumes c = (1 ¡ ¾)y , each period. Substituting the production t t t function into the law of motion for capital yields a …rst order di¤erence equation in k , t k = (1 ¡ ±)k +