Question #72602

Bring out the salient features of Ramsey model for decentralized households (your answer should include the assumptions, important equations, phase diagram and its interpretation). In what respect is it different from the Solow model?

Expert's answer

The Remsey model is a continuation of the Solow model in terms of optimization in the growth process. This is one of the main models of the working model in macroeconomics. The main point about the Ramsey model is that it's a Presbyterian theory, not a prognostic one. In principle, such a model is designed for a closed economy. The only agents to which they belong are households and firms. The representative farm provides works to the firm, and also is a shareholder of the firm.

There are two key equations of Ramsey's model.

1. The first is the law of motion for the accumulation of capital.

2. The second equation concerns the preservation of household behavior and less intuitive.

There are two key equations of Ramsey's model.

1. The first is the law of motion for the accumulation of capital.

2. The second equation concerns the preservation of household behavior and less intuitive.

## Comments

Assignment Expert22.01.18, 16:02Dear Kanak,

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Please submit it with all requirements as an assignment to our control panel and

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Kanak22.01.18, 10:21Word limitation is not complete of this answer.

Plz give answer in approx 700 words

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