Harrod–Domar model

The Harrod–Domar model is a long-run economic growth model.

Variables in the model

Name	Variable	Unit	Rival input?	Variable type	Notes
Output	Y	Units of GDP (dollar?)	–	Endogenous
Physical capital (capital stock)	K		Yes	Endogenous	Physical capital includes things like machines, computers, buildings, etc.
Consumption	C
Investment	I
Amount saved	S
Growth of X	$g_X = \dot{X}/X = \frac{\frac{\partial X}{\partial t}}{X}$	$\text{Time}^{-1}$
Depreciation (rate?)	δ, d, D	Unitless
Capital per worker	k = K/L			Endogenous
Fraction saved	s	Unitless
Time	t	Time, e.g. years
Production function	F

Mathematical formalism

Discrete

$\frac{\Delta Y}Y = \frac{c \Delta K}Y = \frac{c (sY - \delta K)} Y = sc - \delta \frac KYc = sc - \delta$

Continuous

$\dot Y / Y = \dot K / K = (sY - \delta K) / K = sY/K - \delta = sc - \delta$

Commentary

Easterly in The Elusive Quest for Growth criticizes this model.

External links

• Harrod–Domar model (Wikipedia)