diff --git a/lectures/solow.md b/lectures/solow.md index 9d76d62e..c967ac34 100644 --- a/lectures/solow.md +++ b/lectures/solow.md @@ -57,7 +57,9 @@ Production functions with this property include * the **Cobb-Douglas** function $F(K, L) = A K^{\alpha} L^{1-\alpha}$ with $0 \leq \alpha \leq 1$. Here, $\alpha$ is the output elasticity of capital. * the **CES** function $F(K, L) = \left\{ a K^\rho + b L^\rho \right\}^{1/\rho}$ - with $a, b, \rho > 0$. Here, $\rho$ is a parameter that determines the elasticity of substitution between capital and labor. + with $a, b, \rho > 0$. + +Here, $\rho$ is a parameter that determines the elasticity of substitution between capital and labor. We assume a closed economy, so aggregate domestic investment equals aggregate domestic saving.