Proof of Growth Rates in Harrod-Domar Model

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The discussion centers on proving growth rates within the Harrod-Domar model, specifically showing that the growth rate of consumption (ΔC/C) equals the ratio of savings to capital-output ratio (s/v). Participants explore the relationships between income (Y), consumption (C), savings (S), capital stock (K), and investment (I), emphasizing the algebraic connections between these variables. The proof for capital stock growth rate is established as ΔK/K = s/v, leading to inquiries about deriving the growth rate of income as s/v. The conversation seeks detailed explanations and algebraic formulations to clarify these relationships, particularly how to connect changes in consumption to changes in income. Overall, the thread highlights the mathematical intricacies of the Harrod-Domar growth model.
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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
 
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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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