Answer to Question #291002 in Macroeconomics for Godana

Question

Empirical economics growth contribution of Solow growth model, model strength and weakness and main conclusion

Answer 1

$Solution$

Strenght;

The Solow model is a valuable tool for figuring out how technology advancement and capital deepening combine to determine the rate of production growth per worker.

Weakness;

a)There is no profit-rate-dependent investment function.

(b) The hypothesis does not account for the rate and direction of technological advancement.

Conclusion;

Long-run economic growth is the emphasis of the Solow growth model. Saving and investment are important components of economic growth. An rise in saving and investment raises the capital stock and, as a result, the national income and output at full employment.