Solow Growth Model - Video Tutorial
The following videos are designed as a teaching aid for my intermediate level macroeconomics discussion tutorial. All errors are my own. 

The Solow Growth Model (aka the Solow-Swan model, the exogenous growth model, or the neoclassical growth model) is a model of long-run economic growth. It relates growth in a model economy to productivity (via a production function & a process for technology growth), capital accumulation (via a law of motion of capital, with investment defined by an exogenous savings rate, and exogenously defined depreciation), population growth, and a process for technology to accumulate. 

At its simplest, the model demonstrates how these features can combine into a neoclassical framework (i.e. the set of model features we usually start off the course with: production function, rational economic agents, markets in equilibrium, etc.) and result in steady state level of capital (or steady state per-effective worker level with labor-augmented technology growth), which results in balanced growth of output-per-person. Usefully, the model can also show how various shocks and policy tweaks may result in different economic outcomes.

However, the Solow model is only part, and just the start of the story explaining economic growth. 



Outline of Solow Model Series:

  Key Concepts: 

 ⋅ Solow growth model
 ⋅ Savings Rate  ⋅ Depreciation  ⋅ Stock vs flow  ⋅ The capital accumulation equation (the law of motion of capital)

 ⋅ Diminishing returns  ⋅ Net investment  ⋅ Steady state

 ⋅ Solow Diagram
 ⋅ Absolute vs. conditional convergence
  ⋅ Golden rule level of capital

 ⋅ Effective labor
 ⋅ Efficiency of labor
 ⋅ Human capital
 ⋅ Labor-augmenting technology
 ⋅ Models of exogenous growth

 ⋅ Balanced growth path
 ⋅ Transition dynamics  ⋅ Level effect  ⋅ Growth effect
 ⋅ Convergence

Simple Solow Model

We walk through the simple Solow model (no population growth, no technology growth, not too much too complicate the model yet)
View Video Playlist (9 vids 1:55:00)

  1. Introduction and Motivation for the Model

  2. Solow Model Set-up & Assumptions
    Set-up model, discuss assumptions, notation and key variables & parameters. We also start working toward the steady state level of capital.
    The Law of Motion of Capital in the Solow Model
    We discuss the capital accumulation equation (which is fairly central to the solow model).
    Calculating the steady state of the Simple Solow Model
    We find the steady state level of capital in terms of the savings rate and depreciation rate.
  3. Solow Diagram
    It's useful to convert the solow model's equations into a diagram. For many, the model's insights become much more apparent.
    Convergence in the Solow Model
    Via the solow diagram, we discuss why we expect the steady state level of capital to arise.
  4. Solow Model Transition Dynamics
    The Solow model is a dynamic model, meaning we can plot how our variables of interest evolve through time. This helps us better understand  convergence to the steady state and the effect of shocks to the model economy.

Applications and Example Problems of Simple Solow Model
Working with the very simple model: Shocks to the solow model plus their effect via solow diagram and time-series. Some intuition.   

Solow Model with Population Growth

Adding in exogenous population growth doesn't change the model much, but some steady states become balanced growth paths. I walk through the extended model below. View Video Playlist (2 vids 36:55)


Solow Model with Technology Growth and Population Growth

Applications of extended solow model
Working with the solow-swan model with technology growth and population growth. Given the following shocks, we look at the effect on the solow diagram, and show time series analysis on the major economic variables. 

Destruction of Capital (K vanishes, war!)
What is the effect on the Solow model (with technology and population growth) of a sudden decrease in the capital stock?

Varying the Savings Rate (s or s)
What is the effect on the Solow model if a sudden decrease in the savings rate (also discussed, a sudden increase in savings).

Changes in the Depreciation Rate (δ)
What is the impact on the Solow model of an instant change in the depreciation rate (either increase or decrease)?

Changes in Population Growth Rate (n or n)
How does a change in the population growth rate effect the Solow model (with technological change)?

Changes in Technology Growth Rate (g or g)
What is the effect on the Solow growth model of a sudden change in the technological growth rate? (both an increase and a decrease in technology growth)?

*These videos are designed to be an aid to my intro and intermediate macroeconoics discussion tutorials. 
  Notes are guided by the approaches taken by Mankiw's Macroeconomics, Blanchard's Macroeconomics, and C. Jones' Macroeconomics.
  All errors are my own.