Consumers typically if not universally have disposable income beyond basic

Consumers typically if not universally have

This preview shows page 1 - 3 out of 3 pages.

Consumers typically (if not universally) have disposable income beyond basic needs Principal element in Take O ff Savings Domestic International Savings are key to generate investment accelerate economic growth Harrod-Domar Growth Model, 1939, 1946 Focus on the role of capital accumulation into the growth process Capital accumulation results when some proportion of Y t is saved and invested in order to a unmentioned Y t+1 mm o ndfrudfff.IE df goal push 1st a 2nd stage countries into 53 me I investment on
Image of page 1

Subscribe to view the full document.

Yt = the total production of a country today Growth rate of GDP depends: Directly on the national net saving rate “s” Inversely on national capital-output ratio “c” The Linear production function Output Y given by K capital stock times a constant A Y = f(K) Capital is then necessary for output f(0) = 0 Note: Labor (L) is missing, since labor is abundant, not a scarce resource Assumptions Every economy should save a proportion of its Y, even if as to replace worn-out capital. Savings are translated into Investment: S=I Bank use savings to make loans available to businesses for expand. This in turns generate more income Y To growth economies should save and invest The more an economy is able to save and invest, the greater its economic growth Assumptions Labor is upper abundant in developing countries, that’s why its not explicit in the model
Image of page 2
Image of page 3
  • Fall '17
  • Ana De Andrade
  • Capital accumulation, Linear Growth Models

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes