The productivity parameter,A±,plays a larger role in the Solow model than it does in the production model.

Question

Quizplus · Accepted Answer

In the Solow model, changes in productivity parameter A± affect not only the level of output but also the rate of growth of output, whereas in the production model, changes in A± are reflected only in the level of output. Therefore, productivity parameter A± plays a larger role in the Solow model.

The Productivity Parameter,A±,plays a Larger Role in the Solow Model