Bring out the salient features of the Solow model of economic growth.

Salient features of the Solow model of economic growth:--

One of the earliest models of economic growth was developed in Solow. Economic growth is measured by a steady positive increase total output produced by a country, and at the theoretical level it is approximated by an aggregate production function.

Solow’s model is set in a neoclassical framework where it is assumed that all prices have adjusted to clear all the markets (i.e., supply is equal to demand) and incentives have generated efficient outcomes.

The model is consistent with long-term adjustments having fully taken place. In the simplest form, three factors determine aggregate output: labour, capital and technology.

Growth models concentrate on explaining the behaviour of potential output, which is output achieved with a given technology and the full employment use of other factors.

Naturally, they focus on the effects, over time, of changes in labour, capital and technology. Changes in labour can be induced by changes in the population or in the proportion of the people available for work, namely the participation rate.

Changes in existing productive capital depend on net investment that is gross investment minus depreciation _________ ___ _______ __________ ________ _____ _________ ___ ___ _____.
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