<p>I am reading Robert Solow's 1956 paper, entitled 'A Contribution to the Theory of Economic Growth'. I am trying to understand the economic interpretation of the differential equation <span class="math-container">$$\dot{K}=sY(t),$$</span> which is located on page 67 (Solow denotes this equation by <span class="math-container">$(3)$</span>). I have understood each term as: <span class="math-container">$s$</span> is the proportion of saved output, <span class="math-container">$Y(t)$</span> is the production function at time <span class="math-container">$t$</span>, and <span class="math-container">$\dot{K}$</span> is the rate of increase of capital stock with respect to time <span class="math-container">$t$</span>. Although, I am having trouble understanding what this equation actually means (I am a novice at economics). </p>

<macroeconomics><solow>
Solow model and economic interpretation of $\dot{K}=sY(t)$
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# Solow model and economic interpretation of $\dot{K}=sY(t)$

(Asked by: username_0 on 2020-06-16)

I am reading Robert Solow's 1956 paper, entitled 'A Contribution to the Theory of Economic Growth'. I am trying to understand the economic interpretation of the differential equation $$\dot{K}=sY(t),$$ which is located on page 67 (Solow denotes this equation by $(3)$). I have understood each term as: $s$ is the proportion of saved output, $Y(t)$ is the production function at time $t$, and $\dot{K}$ is the rate of increase of capital stock with respect to time $t$. Although, I am having trouble understanding what this equation actually means (I am a novice at economics).

**Tags:** macroeconomics, solow


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