SOLOW MODEL

June 2019, Paper-II
Question
Which one of the following growth models takes technology as an exogenous variable?
a) Solow model
b) Robinson model
c) Lucas model
d) Todaro model

Answer A
 Exogenous growth theory states that economic growth arises due to influences outside the economy. Exogenous growth, a key tenet of neoclassical economic theory, states that growth is fueled by technological progress independent of economic forces. The exogenous growth model factors in production, diminishing returns of capital, savings rates, and technological variables to determine economic growth.

 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.