Solow Model with Resources

\text{Growth rate}

\text{Old BGP}

\text{New BGP}

\text{Actual}

\text{Log GDP per capita}

\text{Time}

\text{Old BGP}

\text{New BGP}

\text{Actual}

PARAMETERS

Adjust parameter(s) to see effect on growth rate and level of GDP per capita. You can adjust multiple parameters. Reload the page to reset.

$g_A =$
$g_L =$
$s_K =$
$s_X =$
$\delta =$
$\alpha =$
$\beta =$

INITIAL CONDITIONS

Adjust initial conditions to see effect on growth rate and level of GDP per capita. Note how these differ from adjusting parameters. Compare the effects of X versus K, in particular.

$K_0 =$
$A_0 =$
$L_0 =$
$X_0 =$

STEADY STATE

See how changing resource use or endowment changes the growth rate in steady state. It can also change the steady state K/Y ratio, and note in the graph what changes the level of the BGP (and what does not).

\text{S.S. } g_y = \left(1-\frac{\beta}{1-\alpha}\right)g_A - \frac{\beta}{1-\alpha}(s_X + g_L)

\Rightarrow 0.0129

(K/Y)_{ss} = \frac{s_K}{g_B + g_L + \delta} = 2.75