The Assumptions of the Solow Growth Model

• The economy consists of one sector producing one good which is used for either investment or consumption,
• It is closed economy without government,
• Since the economy is a closed one, then the saving is equal to investment,
• The economy is always producing its potential which is the full employment level of output,
• In the model, the rate of technological growth, population growth and the

depreciation rate of capital is all determined exogenously.