In this chapter, Professor Larraín explains Solow's Growth Behavioral Model. He explains terms such as capital stock, investment, marginal productivity of capital and capital-labour ratio. He does so using production functions and the capital labor ratio. There is a consideration of population growth, capital stock per worker, depreciation, and saving. Exogenous growth is a given in Solow’s model, and technological progress can be incorporated into the model. There is a discussion about whether convergence of poor countries has happened.
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