New economic model stabilizes growth, solves instability problems effortlessly.
The article explores how population growth affects economic stability by introducing simple assumptions into a basic model. By redistributing wages and considering savings only for those above a certain income level, the model shows that capital accumulation naturally aligns with population growth. This alignment helps stabilize the economy and maintain normal capacity utilization rates. The findings suggest that these adjustments can provide a solution to instability issues in economic growth models.