Theory-Based Models
Theory-Based Models
A growth framework for tracking how capital accumulation converges, and how Golden Rule, AK, MRW, and Malthusian variants change the story.
Variables
The central Solow state variable.
Produced from capital and productivity.
Share of output devoted to accumulation.
Assumptions
The baseline Solow branch has diminishing returns to capital.
AK is the special branch that removes that property.
Population growth, technology growth, and depreciation form the break-even drain.
Steady state sits where saving and break-even needs match.
Parameters
Fraction of output saved and invested.
Curvature of the production function.
Technology level in production.
Growth in labor input.
Growth in labor-augmenting technology.
Capital wear and replacement needs.
Starting capital stock for the transition path.
MRW branch saving share for human capital.
MRW production contribution of human capital.
Fixed land available in the Malthusian branch.
Importance of fixed land in the Malthusian branch.
Target income per person in the Malthusian branch.
Sensitivity of demographic change to income gaps.
Starting human-capital stock for MRW paths.
Shock presets
Raises the saving schedule and pushes the steady state outward.
Raises output and the saving schedule.
Raises the break-even requirement.
Presets