Meade's Model of Economic Growth
The basic assumptions for J.E.Meade's model are as follows:- (1) The economy is question in a closed economy with no relationship with the outside world. (2) There is no government activity involving taxation and expenditure. (3) Perfect competition exists in the market. (4) Constant returns to scale prevails in the economy. (5) There are only two commodities-a consumption good and a capital good. (6) There is full employment of land, labour and machinery. (7) All machinery are alike and the ratio of labour to machinery can be easily varied, hence there is perfect malleability of machinery. (8) There is perfect substitutability between capital goods, consumption goods and any given stock of machines, no matter how old or new they are, a certain percentage gets replaced every year. Meade calls this phenomenon the assumption of depreciation by evaporation.
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