Answer to Question #248736 in Microeconomics for Sayed

Question

Derive the conditions for steady state growth in the Solow model. What are its implications? In what respects is the
golden rule different from the steady state?

Answer 1

The equilibrium growth path in the Solow model (and others) is a steady-state in which "level variables" such as K and Y increase at constant rates and critical variable ratios remain fixed.

Consumption is the distinction between the two lines; the golden rule capital stock is the k that optimizes consumption. This is where the slope of the production function (MPK) equals the slope of the depreciation line (in mathematics). at a constant state