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Unformatted text preview: variables involved. Savings Rate v/s Income per capita in 2000-40-20 20 40 60 80 10000 20000 30000 40000 50000 GDP per capita Savings Rate Problem 3 The graph below shows to some extent that countries with a high growth rate have also a large average saving rate, so the Solow model is indeed supported by this graph. This is because the model sates that countries with low savings rates should have lower growth rates so they reach their steady state lower. Average Savings rates from 1960 and 2000 v/s Growth rate-30-20-10 10 20 30 40 50-0,04-0,02 0,02 0,04 0,06 0,08 Growth Rate Average Saving rate from 1690 and 2000...
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- Spring '08