Question

what are the similarities and differences between the solow growth and IS-LM models

what are the similarities and differences between the solow growth and IS-LM models

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Answer #1

In general case, both the Neoclassical model of growth and Keynesian framework are shown separately in the macroeconomic textbook. Both these models are looking at economic behavior with a different time frame. The neoclassical model is a long run growth model whereas the Keynesian framework is a short run theory. It links between consumption and investment in the economy. The Solow diagram shows that the IS-LM curve intersects in the long run. On the other hand, the IS-LM indicates that the production curve and the saving rate fluctuate in the long run.

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