Abstract
The Harrod-Domar model of growth (Harrod 1939; Domar, 1946) is a dynamic extension of the simple real (moneyless) Keynesian model. It is built on the following assumptions: a) production technology admits constant returns of scale. In particular, it is assumed that technology has fixed coefficients v and u for inputs of capital K and labour L; b) aggregate consumption function C is the canonical long-run Keynesian consumption function. This function is assumed to have constant and identical marginal and average propensity to consume. Aggregate savings function S, therefore, also has constant and identical marginal and average propensity to save; c) capital stock and labour grow over the time. Capital grows because of investments, labour grows because of population growth. Both these circumstances impart to the model a dynamic character.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
