Neoclassical Economic Growth Theory: An Empirical Approach

This paper contributes to the empirical literature by providing a simple theoretical and empirical literature framework. For this purpose we address the neoclassical model of capital accumulation reproduces many of the stylised facts about economic growth and is consistent with many features of actual growth in economies. We also observed that in most industrialised economies, output per capita grows over time, capital per worker grows over time, and productivity grows over time. Robert Solow used the neoclassical growth model as the basis for decomposing the growth in output per capita into portions accounted for by increased inputs and the portion attributable to increases in productivity. This model economy gives us only a glimpse of what it is possible to learn and accomplish by taking the basic neoclassical growth model seriously as a description of how actual economies behave. Solows findings prompted much additional research in productivity measurement and considerable development of mathematical growth models with different ways of incorporating technical change