Proof of Growth Rates in Harrod-Domar Model

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Homework Help Overview

The discussion revolves around the Harrod-Domar growth model, focusing on the relationships between income, consumption, savings, capital stock, and investment. Participants are tasked with proving that the growth rates of consumption and income are equal to the ratio of savings to the capital-output ratio (s/v).

Discussion Character

  • Exploratory, Conceptual clarification, Mathematical reasoning

Approaches and Questions Raised

  • Participants explore algebraic relationships among variables, questioning how to derive the growth rate of income as s/v. Some attempt to clarify the implications of the equations provided, while others seek detailed explanations or corrections to their understanding.

Discussion Status

There is an ongoing exploration of the mathematical relationships within the model. Some participants have offered partial derivations and insights, while others are requesting further clarification and assistance in formalizing their proofs. Multiple interpretations of the equations are being discussed without explicit consensus.

Contextual Notes

Participants are working under the constraints of the Harrod-Domar model, with specific focus on proving relationships between growth rates. There is mention of constants and variables that may affect the derivations, but no resolutions to these constraints have been provided.

puertocolon
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So this is the basic rules:
Y=C+S
S=sY
s= S/Y= ΔS/ΔY
, v= K/Y or Y= K/v
I= ΔK


From this show that:
ΔC/C = s/v
Y,S,C, I, K represent income, consumption, savings, caiptal stock and investment. with s and v as multipliers. I am working off the harod-domar growth models which says that the growth rates of income, savings, investment are equal (s/v).

So algebraically I must also show that consumption growth rate = s/v.



Here's the proof for capital stock growth rate:
ΔK/k= I/K= S/K= (S/Y)/(K/Y)= s/v
 
Last edited:
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Can you show growth rate of income = s/v?
 
Can you help

No i cannot
 
Y= K/v implies ΔY/Y = ΔK/K = s/v. (ΔY/Y = ΔK/K - Δv/v; but Δv = 0 since v is a constant.) Does this help?
 
Starting to can explained to me in detail if possible? Then perhaps we can put it in Algebraic correct form?
 
I meant to say Can YOU explain in detail >>>>> ( LOL )
 
Also i need help solving change of C/ C = s/v i need to prove that
 
You are given Y= K/v, where v is a constant. This implies ΔY= ΔK/v. Therefore vΔY= ΔK and vΔY/Y= ΔK/Y. Since Y = K/v, vΔY/Y= vΔK/K and the v's cancel out.

You can use this method to derive ΔC/C.
 
Can you or anyone deirive it for me?
 
  • #10
I gave you the formula for ΔY/Y. How do you tie ΔC to ΔY?
 

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