Question
The Solow growth model suggests an inverse relationship between population growth rates and per capita income, implying it might be preferable to have low or
The Solow growth model suggests an inverse relationship between population growth rates and per capita income, implying it might be preferable to have low or even negative rates of population growth. Suppose a relationship exists where population growth positively affects technological growth through increased chances of innovation or network externalities. How might this change the Solow model? Would its conclusions about GDP per capita change and, if so, under what circumstances? More generally, what issues might a country with negative population growth (such as modern Japan or Eastern Europe) face that aren't captured by the Solow model?
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