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A Tip on Teaching the Solow Model

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Originally posted on April 27, 2011.

 

The trickiest part of the Solow model is probably explaining how and why we get to the steady state where Investment=Depreciation. Scott Baier teaches at Clemson University using Modern Principles and he first teaches the model by assuming that saving is fixed at say 50. By removing one “moving part” it’s easy to show how we reach the steady state using a table. Scott’s Powerpoints make this clear. The extra step is not for everyone but it’s a nice addition to the toolbox.

 

By the way, if you have an iPad Scott also recommends OmniGraphSketcher. It’s the coolest, quickest way to draw graphs on the fly that I have seen (I mean aside from chalk!).

About the Author
Alex Tabarrok is Bartley J. Madden Chair in Economics at the Mercatus Center at George Mason University and director of research for The Independent Institute. Tabarrok is co-author with Tyler Cowen of the popular economics blog, Marginal Revolution. His recent research looks at bounty hunters, judicial incentives and elections, crime control, patent reform, methods to increase the supply of human organs for transplant, and the regulation of pharmaceuticals. He is the editor of the books, Entrepreneurial Economics: Bright Ideas from the Dismal Science; The Voluntary City: Choice, Community, and Civil Society; and Changing the Guard: Private Prisons and The Control of Crime. His papers have appeared in the Journal of Law and Economics, Public Choice, Economic Inquiry, Journal of Health Economics, Journal of Theoretical Politics, The American Law and Economics Review, Kyklos and many other journals. His popular articles have appeared in The New York Times, The Wall Street Journal, and many other magazines and newspapers.