National income and product per capita is y = Y. L . For larger values of capital, growth is smaller, and at the intersection of depreciation and investment the capital stock does not grow at all.Households also own the capital stock of the economy and rent it to firms. Denote the rental price of capital at time t be R (t). The equation for the change in the capital stock is one of the fundamental ingredients of economic growth. So we can re-state the equation for changes in the stock of capital. We will examine how the model works when growth comes through capital accumulation, and how it works when growth is due to innovation. In your formula, note two things: (i) convert all percentages to fractions (e.g. University College Dublin, Advanced Macroeconomics Notes, 2021 (Karl Whelan) Page 17. Figure 8: The Equilibrium Capital Stock in a Growing Economy.

Capital Stock Formula Economics In Franklin

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