40 thoughts on “Golden Rule Level of Capital & Savings Rate – Solow Model

  1. can you simply set the derivative of production function to equal the depreciation rate and get k from that?

  2. I listened to my professor for two hours and got nothing in my head. Your video made me clear in 20 minutes. Thanks a lot, really appreciate it.

  3. using math to get to the s_g-* should not be that complex.
    you already got the k_t-, then you want to maximize the c_g-*, you don't need to take s_g into that equation so early.

    c_g-*=y_t – i_t
    =f(k_g-) – δk_g-
    do the first derivative of k_g-*, we get:
    (c_g-*)' = αk_g-*^(α-1) – δ
    in order to find max(c_g-*), we make (c_g-*)' = 0
    αk_g-*^(α-1) = δ
    k_g-* = (δ/α)^(1/α-1)
    Finally, we had 1. k_g-* = (δ/α)^(1/α-1)
    2. k_t-* = (s/δ)^(1/1-α)
    in order to get s_g-*, we make 1.=2.
    we can get s_g-* easly =α

  4. This makes no sense… (or probably I'm not getting it). Could it be that the formulas for Savings and GDP from the short and middle run don't apply here?

    Take the equation for private savings (given public savings = 0): S = I and S = Y – T – C (right?). If T is also 0 (by assumption), we have: S = I = Y – C or put differently: C = Y – S or C
    = Y – I.

    So far so good. But if you ask now the simple question "when is C maximised?" wouldn't the simple answer be: C is maximised when S = 0. This of course implies I = 0. In other words, Y = C + I where I is 0 and C increased by the same amount I dropped. WTF???

    Somebody please tell me what's wrong with this rationalization.

  5. hi, thank you for the video but why is your per capita output function yt=kt^a where is your technology term "A"

  6. As an Economics Masters student I have done many of this before but never quite felt I fully understood some of the topics that I just wanted to say a huge thank you for your videos – your explanations are so clear!

  7. Please explain the final exponent of s. It seems to me that it is (1-3α) /(1-α).Thanks for these great videos.James

  8. at 16:43 when you calculate s^((-a/1-a)-2a-1/1-a)=a, shouldn't it calculate to become (1-3a/1-a)? which would make s= a^(1-a/1-3a)

  9. why You dnt include population growth(n) and technological progress(g) instead you involve only depreciation rate

  10. Your videos are very keep include some lecture notes it up! Besides, it would be so shiny if you

  11. Hey great videos they are helping a lot. Do you by any chance have printable versions of your notes

  12. You're amazing… Thank you for going into such detail… It really does help… I hope you're still making videos!!!! (Sri Lanka)

  13. This is an amazing video! You did a really great job of explaining this. Way better than my professor did, haha. Thank you! 

  14. I do think you made a mistake in your calculation:
    When you write out the equation to maximise consumption, the exponent 1/1-alpha becomes for no (apparent) reason alpha/1-alpha.
    Also, when solving for s, the third line from the end does not make any sense.
    Can you check whether the calculations are really right ?

  15. My nation is motivated mostly by the notation Mankiw's intermediate Macro text uses. But I read through Blancard and Jones' texts as well in prep for the videos too.

  16. Your videos are awesome. Very detailed and methodical explanations. I was just wondering which main textbook you're using for these videos? (Since different Macro textbooks use different notations and whatnot). Thanks!

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