Solow-Swan growth model
... and Micro Economics
Real wages are pro-cyclical
The neoclassical growth model or the Solow-Swan growth model is a type of economic model that analyzes long run economic growth in the neoclassical economic framework. This model often attempts to explain the effects of the long run economic growth by considering the capital accumulation, productivity, technological progress, and population growth. The model explains the long term and short implication of these factors on economy.
For instance, policies on economies like investment subsidies or tax cut that can immensely affect the stead output level, but has no effects on the national curve on the long-term levels. Notably, economic growth can only b...