Natural and Warranted Rates of Growth

Discipline: Economics

Formulated by English economist Roy Harrod (1900-1978) and Russian-born economist Evsey Domar (1914-1997), natural and warranted rates of growth is a response to the General Theory of English economist John Maynard Keynes (1883-1946).

The natural rate is the maximum long-term rate of growth in the Harrod-Domar growth model where population growth increases the labor force and technical advances enable productivity gains.

The warranted rate is the growth of national income which maintains the equality of planned saving and planned investment.

Also see: Solow economic growth


Facebook Twitter