Solow-Swan Model and Growth Dynamics: Moving Forward

Abstract

This note in the Milestones series is dedicated to the Solow-Swan model. The aim is to examine the historical significance and enduring impact of the Solow-Swan neoclassical growth model, independently developed by Robert Solow and Trevor Swan in 1956. The model revolutionized economic growth theory by introducing a framework explaining long-term growth through capital accumulation, labor growth, and technological progress. We explore the model's theoretical foundations, influence on subsequent literature, empirical applications, and ongoing relevance. The paper presents novel extensions with discrete time delays that provide insights into cyclical economic phenomena, demonstrating how time-to-build technology can generate endogenous fluctuations within the otherwise stable Solow framework.