Interactive Model
The Golden Rule in the Solow Model
Find the savings rate that maximizes steady-state consumption per worker — the Golden Rule level of capital.
Parameters
s
Savings rate
0.20
Fraction of output saved and invested
α
Capital share
0.33
Output elasticity of capital — also the Golden Rule savings rate
Golden Rule
s
gold
—
c*
max
—
Solow Diagram
k*
—
y*
—
c*
—
Consumption vs. Savings Rate