Understanding the Solow Growth Model: An Overview and Derivation

In this video, we provide an overview and derivation of the Solow growth model, a framework used to understand long-term economic growth. We discuss the three factors that contribute to economic growth, capital accumulation, labor force growth, and technological advancement, and show how they interact to determine the long-run rate of economic growth. We derive the key components and assumptions of the model and show how to find the steady state level of capital per worker and output per worker. We also discuss the golden rule steady state and find the optimum savings rate for a nation.