Dimensional Analysis in Economics: A Study of the Neoclassical Economic Growth Model

Miguel Alvarez Texocotitla, M. David Alvarez Hernandez, Shani Alvarez Hernandez

arXiv 28 Feb 2018 · Econometrics

Abstract

The fundamental purpose of the present research article is to introduce the basic principles of Dimensional Analysis in the context of the neoclassical economic theory, in order to apply such principles to the fundamental relations that underlay most models of economic growth. In particular, basic instruments from Dimensional Analysis are used to evaluate the analytical consistency of the Neoclassical economic growth model. The analysis shows that an adjustment to the model is required in such a way that the principle of dimensional homogeneity is satisfied.

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