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Neoclassical growth model - Wikipedia, the free encyclopedia
In 1987, Solow received the Nobel Prize in Economics for his work. Solow was also the first economist to develop a growth model which distinguished between vintages of capital.[4] In Solow's model, new capital is more valuable than old (vintage) capital because—since capital is produced based on known technology, and technology improves with time—new capital will be more productive than old capital.[4] Both Paul Romer and Robert Lucas, Jr. subsequently developed alternatives to Solow's neo-classical growth model.[4] Today, economists use Solow's sources-of-growth accounting to estimate the separate effects on economic growth of technological change, capital, and labor.[4]
In 1987, Solow received the Nobel Prize in Economics for his work. Solow was also the first economist to develop a growth model which distinguished between vintages of capital.[4] In Solow's model, new capital is more valuable than old (vintage) capital because—since capital is produced based on known technology, and technology improves with time—new capital will be more productive than old capital.[4] Both Paul Romer and Robert Lucas, Jr. subsequently developed alternatives to Solow's neo-classical growth model.[4] Today, economists use Solow's sources-of-growth accounting to estimate the separate effects on economic growth of technological change, capital, and labor.[4]
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