Re: dse-2008 solow

Posted by Chinni18 on Jun 09, 2012; 1:35pm
URL: http://discussion-forum.276.s1.nabble.com/dse-2008-solow-tp7577389p7577603.html

tim
It won't increase the steady state because the steady state is not affected by the savings rate. Only per capita output and k-l ratio increase/decrease.
If savings grow then capital grows. Output increases and capital accumulation takes place. But diminishing returns will hold and thus the growth rate decreases till it again declines to the population growth rate. Anywhere else there will be disequilibrium. So we can say that in long run, steady state is not affected.