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    Non linear dynamic assignment

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    NLD Assignment

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    Non linear dynamic assignment

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    NLD Assignment

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    of 3

    The Solow Theory of Economic Growth

    Avneet Sharma(202101104)∗ and Arjav Gandhi(202101448)†


    Dhirubhai Ambani Institute of Information & Communication Technology,
    Gandhinagar, Gujarat 382007, India
    SC401, Introduction to Nonlinear Dynamics

    I. Equations II. Graphs

    The following parameter values were used throughout the


    Y (t) = F (C, L) = C α L1−α , 0<α<1
    assignment:

    Labor Growth (Harrod’s Natural Growth Model)


    • s = 0.15 (savings rate)
    Labor grows exponentially:
    • n = 0.03 (labour growth rate)
    L̇ = nL, L(t) = L0 ent , 0<n<1

    • α = 0.5 (Cobb-Douglas parameter)


    Capital Growth

    The rate of capital accumulation is proportional to the A. Question 1


    savings from production:
    Ċ = sY, 0<s<1 We plot ṙ versus r to analyze the phase diagram, iden-
    tify fixed points, and verify intersections by graphing
    y1 = srα and y2 = nr.
    Capital-to-Labor Ratio Dynamics

    C
    By defining r = L, the dynamics of r are described by:
    ṙ = srα − nr

    Integral Solution for r(t)

    The analytical solution to the above differential equa-


    tion is:
    1
     s  1−α h 1
    i 1−α
    r(t) = 1 + Ae−n(1−α)t
    n Fig. 1 Phase Diagram of ṙ vs r
    where A is an integration constant given by:
    n
    A= r1−α − 1
    s 0

    Transition Time

    The transition from early power-law growth to stabi-


    lization occurs at:
     
    1 −A
    ttrans = ln
    n(1 − α) 1−α
    Fig. 2 Graphs of y1 and y2 vs r
    The phase diagram reveals two fixed points, which cor-
    ∗ Electronic address: [email protected] respond to the intersections of y1 and y2, aligning with
    † Electronic address: [email protected] theoretical predictions.
    2

    B. Question 2

    Fig. 6 Log-Log Plot of Numerical Solution for r(t) with


    r0 = 0.01 and ∆t = 0.01. Transition time ttrans =
    45.787.

    Fig. 3 Numerical and Analytical Solutions with r0 = 0


    and ∆t = 0.01. ttrans = 46.210 s (normal scale)

    Fig. 7 Log-Log Plot of Analytical Solution for r(t) with


    r0 = 0.01. Transition time ttrans = 45.787.
    Fig. 4 Comparison of Numerical and Analytical
    Solutions for r(t) with r0 = 0 and ∆t = 0.01. Transition
    time ttrans = 46.210 s (log-log scale)
    When r(0) = 0, One limitation of numerical integra-
    tion is that Euler’s approach stops at zero while the an-
    alytical answer grows as predicted.

    C. Question 3

    Fig. 8 Comparison of Numerical Solutions for different


    values of r(0) (normal scale)

    Fig. 5 Comparison of Numerical and Analytical


    Solutions for r(t) with r0 = 0.01 and ∆t = 0.01.
    Transition time ttrans = 45.787.
    3

    propriate initial conditions.


    • The convergence of both numerical and analytical
    solutions to the same steady-state trend reinforces
    the stability of the system and demonstrates the
    predictive power of the Solow model in long-term
    economic growth.

    Fig. 9 Comparison of Analytical Solutions for different


    values of r(0) (normal scale)

    Fig. 10 Comparison of Numerical Solutions for different


    values of r(0) (log-log scale)

    Fig. 11 Comparison of Analytical Solutions for different


    values of r(0) (log-log scale)

    III. Conclusions
    • The study highlights the importance of initial con-
    ditions in the Solow growth model. For r(0) = 0,
    numerical solutions fail to capture initial growth
    dynamics, underscoring the limitations of the Eu-
    ler method in such cases.
    • For r(0) ̸= 0, numerical solutions align closely with
    analytical results, validating the accuracy of the
    model in simulating growth trajectories under ap-

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