Notes on Solow Model for Econ 110

Ethan L. Struby, Carleton College

Preface

This document is an introduction to a canonical model of macroeconomic growth, the “Solow-Swan” model (named after the two economists who independently developed it - Robert Solow and Trevor Swan). Unfortunately for Swan, Solow receives most of the credit for the model, so typically it’s just referred to as the Solow model.

Outline

• The introduction. You’re reading this.
• Growth data. What facts would we like to explain?
• The details of the model:
  • Assumptions
  • How to solve for the model’s long run predictions
  • Using the model to make predictions and comparisons across countries
  • Using the model to make predictions about changes within a country
• Fundamental causes of growth
• Appendix: some reminders about math
• Appendix: A list of variables
• Appendix: An extension with exponential population and productivity growth

About these notes

This set of notes was written by Ethan Struby in Summer 2019. It’s based on versions of notes used in my Principles of Macro (Econ 110) classes at Carleton, and incorporates Shiny apps that were first tested in spring 2019. If you have suggestions or feedback, please feel free to e-mail. (If you’re a student at a different institution who has stumbled on these notes, hi! I’d suggest asking your professor or TA about your course material instead of Googling.).

Thanks to my students who provided lots of constructive feedback how to make the Solow model more clear and improve the Shiny apps. Thanks also to Aaron Swoboda for Shiny help, Faress Bhuiyan for helpful conversations about teaching growth at the Principles level, and Mike Tie for technical support with Carleton’s Shiny server. The digital version and Shiny apps used here were also supported by Carleton’s Dean of the College office through a Curricular Innovation Grant.

These notes were last updated in October 2024. Updates included using version 10 of the PWT for plots of data, correcting typos, and adding the appendix including productivity and population growth, and correcting a lot of typos.