Answer to Question #206977 in Macroeconomics for Love

Question

There have been 56363 confirmed deaths in South Africa alone from Covid-19 as of 30 May 2021.

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

According to the Solow model, a rise in population growth rate will lead to an improvement in aggregate output growth but will not have long term influence on per capita production growth. The steady state level of per capita output falls as the growth rate of population raises.

Due to the covid-19 pandemic that has resulted in a large number of deaths in south africa, this implies that the population growth rate is declining which is negatively affecting the aggregate output growth and this will have a long term influence on per capita production growth. The level of per capita output will raise as the population growth rate falls.