Evidence and data
Use investment rates, population growth, depreciation assumptions, productivity, and output per worker to interpret the phase diagram.
Calibration or measurement
Capital share, savings, depreciation, and population growth determine level comparisons. Technology growth determines balanced-growth movement.
Boundaries
- Technology is exogenous.
- Institutional and human-capital channels enter only if the model is augmented.
- Convergence is conditional, not automatic across all countries.
Use guidance
- When sufficient
- Long-run cross-country level comparisons with capital, labor, and exogenous technology. The convergence and steady-state intuition.
- When sketch only
- Do not use for productivity-policy analysis. Technology is exogenous; institutions, human capital, and innovation do not enter without augmentation.
- When to switch
- Switch to an augmented Solow (Mankiw-Romer-Weil) for human-capital effects, or to an endogenous-growth model (Romer 1990, Aghion-Howitt) when innovation incentives are the question.
- Falsification signal
- Persistent divergence between countries with similar investment rates, depreciation, and population growth falsifies the unconditional-convergence prediction. Conditional convergence holds; unconditional convergence does not.