Solow Growth Model | Part 2 | Steady State | Intermediate Macroeconomics

In this video, I discuss the steady state associated with a baseline version of the Solow growth model. I begin by defining a steady state, then solve for the steady state values of our endogenous variables capital, output, investment, and consumption (all in per capita terms). Finally, I discuss why a steady state exists in the Solow Growth Model: depreciation in capital and constant returns to scale production.

Chapters
0:00 - Introduction
0:46 - Defining a steady state
1:50 - Solving for k*
5:56 - Solving for y*, i*, and c*
8:40 - Why does a steady state exist?
15:12 - Concluding remarks

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For Part 1 of the Solow Growth Model series, see the following video:
The focus of Part 1 is to introduce the model and its equations, along with finding a solution path for the endogenous variables. The end of Part 1 hints at the notion of a steady state. It also includes a Matlab example with the Solow Model.

[CorbinTinnon]

Thank you so much for this video. This is the best explanation I have seen.