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The reason why it is not formally taught as a viable growth model is due to its inherent weaknesses. The weaknesses lie in the assumptions of the model. When creating an economic theory, you can make any assumptions you want, regardless of how unrealistic they may be. If the model starts to fall apart when you rest the weakest assumptions, it loses credibility.
One problem with the model is that the price for labor and capital (wage rate and interest rate) are fixed. Along with this assumption, the model assumes that each input is used in equal proportions. In reality we know that these assumptions don't hold.
Another problem with the model is that is assumes investors (savers) are only influenced by changes in output. The greater the output, the more investors will invest capital which in turn increases output. This is known as the accelerator principle and it does not hold up in empirical studies. Investors are influenced by the amount of risk they must take given the expected rate of return they will receive on their investment.
A model that rests the assumptions of the H-D model is the Solow Model (aka Solow-Swan Model). It uses some of H-D framework but then expands on it to allow for flexibility in the use of both capital and labor as flexible inputs to output. A great source for a more detailed but easy to understand explanation is Wikipedia. Check out the related link. After reading this, review the commentary on the Solow Model. Hope this help.
What else can I help you with?
How does growth in population affect economic development of country?
Every one know that, now a days population increasing. due to increase in population , poverty is also increase. it affect on our economic development. growth of economic development stop by poverty.
What factors led to growth of ready to wear?
People don't have much time to get ready now-a-days. So, we have ready to wear clothes so that we don't spend much time ironing them supporting our random plans.
How many days are there in 10 business days?
About 2 weeks (14). Business days don't count weekends.
How many working days a month?
Considering sunday as holiday, there should be 26 working days in a month. However, if both saturday and sunday are closed, then working days will be reduced 20 days ,taking into consideration 31 days a month.
How many working days will there be in 2009 if my employer works 5 days a week and we get 7 holidays?
The number of working days depends on the company you work for. How many paid holidays are there? Are they open 5 days a week or 6 or 7 days a week?
What is the growth rate of a cucumber?
The growth rate of cucumbers will be 63 days.
What is the most widely used energy in the Philippines?
5 days to christmas you mug
What is the Growth of a sunflower?
http://www.seattlecentral.org/qelp/sets/009/009.html has a growth chart showing the height of a sunflower on various days.In general, questions about growth rates must specify the time interval. Is the question about the first 30 days of the sunflower's life or the days between 60 and 90? The answer would be very different.From the data at the link above, for the first 28 days, the growth rate is 3.5 cm per day. For the days betwen 63 and 84, the growth rate is 0.35 cm per day, or about 1/10 the growth rate during the first 28 days.
What are the days of work for a fashion model?
They can if they wanted to.
What is the growth rate of a hesperoyucca whipplei plant that grew 3.7meters in 14days?
The rate of growth is 3.7 meter in 14 days. Not meaning to be rude. Honestly, just divide 3.7 meters by 14 days.
How many days does a model work?
None if you're ugly.
How many days to harves petchay?
Pechay, or Chinese cabbage, takes 50 to 85 days of growth before it is ready to harvest.
How many leaves will a dicotyledon hahe after seven days?
The number of leaves a dicotyledon plant will have after seven days can vary depending on the specific plant species and its growth rate. On average, a dicotyledon plant may have a few primary leaves and possibly some secondary leaves after seven days of growth.
Does grow taller in 21 days work?
No. Growth "systems" are scams preying on the insecure
What is primary source of energy for seedlings in the early days of growth?
I dont know get a life
What is the primary source of energy for seadlings in the early days of growth?
The primary source of energy for seedlings in the early days of growth is stored energy in the seed itself. As the seed germinates, it uses the stored starches and oils for initial growth until it can develop its own photosynthetic capabilities to produce energy from sunlight.
What is the time span between the growth and adulthood of spores?
The time span between the growth of spores and adulthood varies depending on the species and environmental conditions. It can range from a few days to several weeks. Generally, spore germination, growth, and maturation into adulthood can take anywhere from a few days to a few weeks in ideal conditions.
