Modeling the Economic Growth in Romania with the Solow Model

by Caraiani, Petre
Published in Romanian Journal of Economic Forecasting, volume 8 issue 1, 2007

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In this study I make an estimation of the Solow model for the Romanian economy.
Starting from the estimates of the parameters from other studies, I simulate the model both for the 1990-2004 period and in the long run. The study shows that the Solow model provides a good approximation of the dynamics of the Romanian economy for the 1990-2004 period, with respect to the dynamics of the aggregate GDP and to the ratios of the main macroeconomic variables, like production per worker, capital-output ratio or capital per worker. The simulation for the 2030 time horizon indicates a potential of growth of over 3%.

Keywords: economic growth, productivity, transition.
JEL classification: O47, P47.