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Steady-state growth

A state in which the rates of growth of the variables in an economic system remain constant over time. Take for example an economy consisting simply of firms and households (no government, no foreign trade), where firrns receive consumers’ expenditure in return for goods and pay this back to households in return for productive services: households spend part of what firms pay them on consumption expenditure and save the rest, while firrns spend on new investment exactly the same amount as households save. If national income, consumption expenditures, saving and investment expenditures were all now growing at, say, 5 per cent per annum, every year without change, then we would say that the economy was in steady-state growth. It need not be the case that the growth rates of the variables are all equal (although theory tells us that in this simple example they would be), but the growth rate of each variable must be constant through time for steady-state growth to exist. The steady-state solution is generally the starting-point in the analysis of most models of economic growth. It therefore fulfils much the same role as the concept of equilibrium in static theory: as a useful theoretical abstraction which may hardly ever be realized in practice.

Reference: The Penguin Dictionary of Economics, 3rd edt.