Originally posted on April 27, 2011.
The trickiest part of the Solow model is probably explaining how and why we get to the steady state where Investment=Depreciation. Scott Baier teaches at Clemson University using Modern Principles and he first teaches the model by assuming that saving is fixed at say 50. By removing one “moving part” it’s easy to show how we reach the steady state using a table. Scott’s Powerpoints make this clear. The extra step is not for everyone but it’s a nice addition to the toolbox.
By the way, if you have an iPad Scott also recommends OmniGraphSketcher. It’s the coolest, quickest way to draw graphs on the fly that I have seen (I mean aside from chalk!).