• APPLICATION OF DIFFERENTIAL EQUATION IN ECONOMICAL SOLOW GROWTH MODEL

Abstract

The Solow growth model is an economic model. This model is the so-called Solow-swan model name after Robert (Bob) Solow and Trevor swan, or the simple Solow model. Bob Solow developed many implications and applications of his model and was awarded the Nobel prize in economics for his contributions. Solow model is a simple and abstract representation of complex economy. Solow uses differential equation for solving model. To represent the process of growth macroeconomic equilibrium. We have to consider households and individuals and individuals with different tastes, abilities, incomes and roles in society, various sectors, and multiple social interactions. The Solow model cuts through there complications by constructing simple one best economy. With small reference of particular individual decisions. Solow model is closed relation with economic growth model. The Solow model makes relatively few speculation about household. The Solow growth model which models the growth of the ratio of capital to labour under the assumption. The model predicts that is the long term, capital will grow exponentially along with the labour. If the capital is very low, It will rapidly increase till it becomes equitiesly proportional to the labour. It remarkably represents that capital remains proportional to the labour.