**The Solow****Growth model **is an exogenous model of economic *Growth that analyzes changes in the level of output in an economy over time as a result of changes in the population growth rate, the savings rate, and the rate of technological progress.*

**Assumptions of the Solow growth model:**

*1. One composite good produced which is either consumed or accumulated in capital form*

*2. Homogeneous labour*

*3. Two factors of production— Capital (K) and Labour*

*4. Constant Return to Scale (CRS) production function*

*5. Economy exhibits diminishing returns in the labor and capital inputs.*

*6. Marginal Propensity to Save (s)—assumed constant*

*7. Exogenously given labour force growth rate (n)*

*8. Closed economy and Laissez Faire*

**Structure of the solow growth model:**

*Suppose that there is no depreciation, Consider aggregate production function.*

**Y=F(K,L)** *Where Y is the aggregate output K is the aggregate capital and L is the labour force*

*We have already assumed that production function exhibit constant returns to scale that mean…
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