Economic Growth - Solow Growth Model and Beyond Essay

stinting Growth - Solow Growth Model and Beyond - Essay ExampleAt the core of this model, it is a classical aggregate production function that in most cases is similar to Cobb Douglas model and this makes it possible for this model to be in contact with microeconomics. This model was established by Robert Solow and Trevor Swan in the year 1956 (Dimand and Spencer, 2008). Dimand and Spencer (2008) say that the var. of Solows Growth model where savings are chosen optimally by utility maximation of the households is known as the Neoclassical Growth Model. The neoclassical model was an extension of Harrod Domar model that was developed in 1946. It superseded Harrod Domar model due to the characteristic mathematical attractiveness. In that sense, the model was a convenient start gunpoint for various extensions (Hendrik and Lewer, 2015).David Cass developed a solution for the festering model in 1965 with expert change and the growth in population (Jones, 1997). Jones (1997) observ ed that Solow and Swan did an extension of Harrod - Domar model, first, by the addition of labor as a factor of production. Secondly, they ensured that the capital labor ratios were not in a fixed position like in HarrodDomar models case. In a study carried out by Jones he recognized the pass that provided for a continual increase in capital intensity which could be distinguished from progress in technology (Jones, 1997). In this sense, they independently simplified the growth model. Solows model fitted the economic growth data that was available with some level of success. In the present day, his model is used by economists in the union of the separate effects on the economic growth of capital, labor as well as the technological change. The previous models that include the closed economy and small open economy models give a atmospheric static observation of the economy at a given point in time. The Solow growth model allows us a dynamic view of how savings affects the economy over time. The