I am asking in reference to the growth accounting equation. From the equation it doesn’t seem so but in the answer to the sample questions, it says that it does.
Cant figure out how thats true
Hey, I think in this model all the savings are asumed to be invested, i.e savings equal investment. Please correct me if I am wrong
economy growth rate = alpha x growth rate of capital + (1-alpha) x growth rate of labor + growth rate of technology.
In economics, Saving = Investments, then if there is more saving, their will be more capital available in the economy, and thus will boost the growth rate of capital, which in turn will boost the growth rate of the economy.