Applied aspects of possibilities for economic growth forecasting by models of Domar and Harrod

Abstract

The main task of  the economic growth modeling is to develop methods for forecasting changes in macroeconomic indicators in the medium and long term and to identify the initial factors of influence. The goal of the government and the citizens of any country is to create conditions for the growth of its economy. That is why it is so important to know what processes will be observed, what indicators can be controlled and what are the general prospects for such growth. Any model cannot be considered theoretically sound if these questions are not answered. The study aims to evaluate the application of Domar and Harrod's models to forecast the economic development of national economies or individual industries. The process of estimating and modelling economic growth is the research object. The subject of study is theoretical and methodological and applied application of economic growth models Domar and Harrod as models of economic growth, which explains the growth of the economy under the condition of constant capital intensity ratios and propensity to save in the long run. The research methods focus on generalisation - establishing economic growth indicators; analysis - studying the determinants of economic growth; modelling - building mathematical models of economic growth according to Domar and Harrod; scientific abstraction - assessing the degree of influence of factors of economic growth. These studies have shown that the main reason for the decrease in the theoretical equilibrium growth rate in the Harrod model is the increase in capital intensity. As a result, steady economic growth will prevail at the national level. At the same time, the analysis of the possibilities of applying the Domar model in practice showed that it could not be involved in industrialised countries. But it is appropriate for some industries in the medium term (up to 4-5 years). Therefore, scientists and experts can further use the research results in applied modelling of economic growth.