Simulating the Solow Model in R

In this section, we simulate the Simple Solow model and plot the convergence of \(\frac{Y}{L}\) and \(\frac{K}{L}\) ratio over time.

Output <- 2
Capital <- 2
Labour <- 2
 
generator <- function(steps,s,n,d){
    for(i in 2:(steps)){
        Capital[i] <- (1-s)*Output[i-1]+(1-n-d)*Capital[i-1]
        Labour[i] <- n*Labour[i-1] + Labour[i-1]  
        Output[i] <- (Capital[i])^0.5*((Labour[i])^0.5)     }
    return(data.frame(Output = Output, Capital = Capital, Labour = Labour))   }
df <- generator(steps=500,s=0.5,n=0.01,d=0.01)