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Neoclassical Dynamics and Solow Growth Models

In: The Elements and Dynamic Systems of Economic Growth and Trade Models

Author

Listed:
  • Bjarne S. Jensen

    (University of Southern Denmark (SDU))

Abstract

This chapter studies the dynamic system of the basic neoclassical macro growth model of Solow (1956), which was the seminal growth model using a smooth production function (linking the factor inputs of Labor and Capital to Output) that together with saving functions provided the differential (nonlinear) equation of capital accumulation. Labor (population ) grows at an exogenous rate. The general framework for analyzing the solutions (state variables, ratios/balanced growth) of neoclassical (Solow) growth models is provided by homogeneous dynamic systems (Chap. 28 ). After presenting the dynamic model, stability properties for the general model is discussed, complemented with explicit solutions to special cases, Cobb-Douglas and Leontief technology. It concludes with a detailed clarification of the kinematic distinction between asymptotic ratio stability and the geometric (trajectory) convergence of the phase curves.

Suggested Citation

  • Bjarne S. Jensen, 2025. "Neoclassical Dynamics and Solow Growth Models," Springer Books, in: The Elements and Dynamic Systems of Economic Growth and Trade Models, edition 0, chapter 0, pages 261-277, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-52493-6_11
    DOI: 10.1007/978-3-031-52493-6_11
    as

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