Economic History

Practical class #3

Ricardo Gouveia-Mendes

Undergraduate in Economics
1st Semester 2023-24

Today’s Class

  1. The Solow Growth Model
    1. Assumptions: CRS technology, Labor, Capital
    2. The Solow Diagram
  1. Some implications
    1. The long-run and the short-run growth
    2. The golden savings rule
    3. The convergence
  1. Practicing with the Solow Growth Model


Solow, Robert M. (February 1956). “A contribution to the theory of economic growth”. Quarterly Journal of Economics. 70 (1): 65–94.

Robert M. Solow (1924–)
Nobel Prize in Economics (1987)

Now, you know that…

  • Capital accumulation may lead to short-run growth, but not long-run growth
  • Productivity is what drives long-run growth
  • Countries with the same \(s\), \(\delta\) and \(f(\cdot)\) should converge; faster the more far apart the countries are from the steady state
  • Real convergent patterns do not match the Solow Model predictions