Comparison of Two Dynamic Models of Economic Growth

Abstract

Two dynamic models of economic growth with the same balance equation are considered.  First, we establish the solution of the Harrod-Domar model with time-dependent coefficient of the capital intensity of income growth. (Previously, the only constant coefficients were considered.) Second, we show that in the Solow model with the Cobb-Douglas production function, the capital intensity of income growth depends on time. Comparing these models, we demonstrate the effectiveness of the setting optimal control problems (maximization of the integral discounted utility function) in the extended the Harrod-Domar model.