# Simple Solow Model

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This Demonstration gives a simple visualization of the Solow growth model. Output, , is a function of capital, ; and is shown in green. A fraction of output is saved and invested so investment is , shown in red. Capital also depreciates at the rate , so depreciation is , shown in blue. If (as shown in light green), then capital accumulates and the economy grows. If (as shown in light red), then capital decumulates and the economy shrinks. If we are at a steady state. The parameter can be thought of as representing technology since an increase in means that more output can be produced from the same amount of capital.

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Contributed by: Alex Tabarrok (March 2011)

Based on a program by: Fiona Maclachlan

Open content licensed under CC BY-NC-SA

## Snapshots

## Details

[1] T. Cowen and A. Tabarrok, *Modern Principles: Macroeconomics*, New York: Worth Publishers, 2010.

## Permanent Citation