Abstract for: Exploring Harrod Domar and Solow Models of Economic Growth
This paper models economic growth as described by the Harrod Domar and Solow models using the System Dynamics framework. The modelling exercise highlights the boundaries of the Harrod Domar model and presents alternative solutions to overcome these boundaries. As an extension to the Harrod Domar model, this paper demonstrates the endogenous effect of savings and population changes on economic growth. Solow’s enhancement of the Harrod Domar model has been simulated to highlight the capital output constraint in determining income growth. The System dynamic modelling toolset in this paper provides markedly different modelling perspectives that are unavailable in static models. In addition, the models developed for this paper allow easier testing of sensitivities to a range of macroeconomic variables.