Answer to Question #206871 in Macroeconomics for Kabelo Gaetsalwe

Question

Use specifically the Solow growth model to discuss the implications of this pandemic

on the prospects of long-run economic growth for South Africa.

Answer 1

A higher population growth rate boosts aggregate output growth but has little long-term impact on per capita production growth, according to the Solow model. As population growth rates increase, the steady-state level of per capita output falls.

The COVID-19 pandemic has been a humanitarian and economic tragedy.

Some of which include

(1) supply-side effects (lower labor supply and higher real wages),

(2) demand-side effects (lower consumption),

(3) human capital effects (poor health and education), and

(4) social trust effects are all examples of supply-side effects (between individuals, and towards political institutions).

According to study, the lost education linked with school closures and online education could significantly lower consumption of the impacted groups by 1%.

COVID-19, like AIDS, has the ability to change the societies in which it infects its victims. COVID-19 has this effect primarily through impeding the transfer of human capital from one generation to the next, which is perhaps the most important mechanism for civilizations to thrive and develop. The effect is not felt in short-run but spiral radipdly in long-run affecting economic growth.