ABSTRACT
This study discusses the implementation of the Newton-Raphson iterative method in solving non-linear equations that appear in the Solow economic growth model. This model functions to analyze the influence of economic variables such as savin gs rates, capital depreciation, and output elasticity of capital on long-term economic equilibrium. The Newton-Raphson method is used because of its efficiency in achieving rapid convergence to a solution, although it is highly dependent on good initial guesses. Simulation results show that this method is able to find accurate numerical solutions with minimum number of iterations, so it has the potential to be applied in economic policy analysis that requires high precision.
References
- Jones, C.I. (2016). Introduction to Economic Growth (3rd ed.). WW Norton & Company.
- Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65-94. https://doi.org/10.2307/1884513
- Acemoglu, D. (2019). Introduction to Modern Economic Growth. Princeton University Press.
- Sanchez, A. (2014). A Comparison of Methods for Solving Nonlinear Economic Models. Computational Economics, 44(1), 1-16.
- Zubair, S., Khan, M.M., & Hassan, A. (2018). An Efficient Algorithm for the Solution of onlinear Equations. Applied Mathematics and Computation, 331, 118-129.
- Fackler, P.L., & Miranda, M.J. (2016). Solving Nonlinear Economic Models: A Practical Guide. Journal of Economic Dynamics and Control, 72, 1-18.
- Schmitt-Grohé, S., & Uribe, M. (2018). Optimal Fiscal and Monetary Policy in a Medium-Scale DSGE Model. National Bureau of Economic Research.
- Ishfaq, M., Arshad, M., & Khan, Z. (2020). Numerical Methods for Nonlinear Equations: A Review. Journal of Computational and Applied Mathematics, 367, 112442.
- (2012). Macroeconomics. Yogyakarta: BPFE-Yogyakarta.
- Samuelson, P. A. (1996). Economics (16th ed.). New York: McGraw-Hill.
- Todaro, M. P., & Smith, S. C. (1994). Economic Development (5th ed.). New York:
- Rosidi, M. (2019). Numerical Methods Using R for Environmental Engineering.
- Romer, P. M. (1990). Endogenous Technological Change. Journal of Political Economy, 98(5, Part 2), S71-S102.
- Mursal, N.S., & Syahnur, S. (2015). SOLOW MODEL APPROACH. Journal of Economics: Unsyiah Postgraduate Program, 3(1).
- The World Bank. (n.d.). Gross Savings (% of GDP) – Thailand. Retrieved from World Bank.
- International Labour Organization (ILO). (n.d.). ILOSTAT Database – Thailand Labour Force. Retrieved from ILOSTAT.
- Caselli, F. (2005). Accounting for Cross-Country Income Differences. In Handbook of Economic Growth (Vol. 1, Elsevier).
- Barro, R. J., & Sala-i-Martin, X. (2004). Economic Growth (2nd ed.). MIT Press.
- Organisation for Economic Co-operation and Development (OECD). (n.d.). Productivity Statistics. Retrieved from OECD Statistics.
Download all article in PDF
