Question

Ramsey model of economic growth economics discussion

Answer 1

Answer:

The Ramsey–Cass–Koopmans model differs from the Solow–Swan model in that the choice of consumption is explicitly microfounded at a point in time and so endogenizes the savings rate. As a result, unlike in the Solow–Swan model, the saving rate may not be constant along the transition to the long run steady state.

Answer 2

Explanation:

Aggregate production function describes the relationship of the size of an economy’s la­bour force and its capital stock with the level of that country’s GNP. If measures the value of output or national product, given the value of the aggregate capital stock and labour force.

Natural resources, such as land, are sometimes incorporated as a third factor, but most often are subsumed as part of the capital stock. The aggregate production function tells us about how capital and labour contribute to growth.

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