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| Abdoul A. Ndiaye, Mamadou A. Konte and Yao T. Kpegli |
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| ''The Solow model augmented with the net capital inflows to-GDP-ratio'' |
| ( 2017, Vol. 37 No.3 ) |
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| In this paper, we study the Solow model in open economy. For this purpose, we increase the traditional model with the net capital inflows to-GDP-ratio. We end up with two main implications. First, the steady state net marginal product of capital more correctly predicts the real interest rate than that obtained in traditional model. Second, the golden rule of the savings rate tells us that a savings rate that is below (or above) the share of capital in GDP doesn't necessarily mean that the savings rate is too low (or too high). |
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| Keywords: Solow model, economic growth, net capital inflow to-GDP-ratio, speed of convergence, golden rule. |
JEL: O4 - Economic Growth and Aggregate Productivity: General
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| Manuscript Received : Nov 19 2016 | | Manuscript Accepted : Aug 31 2017 |
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