Golden Rule of Capital Accumulation

Discipline: Economics

A term used by English economist ERNEST PHELPS (1906-1994), golden rule of capital accumulation analyzes the best plan of economic growth which will give the optimal sustained level of consumption per capita in an economy.

It is assumed that each generation will save for future generations a proportion of the income which was in turn saved for it by its previous generation.

E S Phelps, 'The Golden Rule of Accumulation: A Fable for Growthmen', American Economic Review, vol. LII (September, 1961), 638-43


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