BESIANA ÇOBANI, AURORA SIMONI, ORNELA GORDANI
Abstract :
This paper seeks to compare the Solow’s model and the Ramsey-Cass- Koopmans (RCK) Model to provide a forecast for the growth pattern of the Albanian economy. Success factors such as the factors behind the economic dynamism, the models focus on, the long run growth and the context of technological development and accumulation of capital are their focus. The Solow growth model regards technological advancement and the accumulation of capital as the crucial motorizes of growth. But also points out the law of decreasing returns to capital. On the other hand, the RCK Model enhances the analysis of economic growth explaining the household’s behavior with respect to consumption and saving specifically to respond to the need of time preference. Therefore, it is crucial in this model to explain things around smoothing of consumption, appropriate levels of saving, the cost of the economic policy, among other things.In the context of Albania’s economy, the models can be applied by using macroeconomic indicators such as growth rates of gross domestic product (GDP), work force population, amount of capital accumulated and other technological measures. The Solow and RCK mode implementation of the RCK model to the US economy has not been a straight forward procedure.
Keywords : Ordinary differencial equations(ODE), Ramsey-Cass-Koopmans, solow growth model, economic growth, investment, FDI, Albania, MATLAB, python.