What is a Keynesian Growth Model?
Keynes’ model and Keynesian models were developed to explains business cycles: a short run phenomena
As such they attribute a major role to aggregate expenditures (demand side)
Regarding the supply side, they assume that there is unemployment: production responds fast to increases in aggregate demand because capital and labor is unemployed.
Factors presents in Keynesian’s growth model
Aggregate Demand, AD
– AD = C + I + G + X-M
– C, Consumption expenditures
– I, Investment expenditures
– G, Government expenditures
– X-M, Foreigners’ Expenditures
Aggregate Supply
– AS < ASfe
– Aggregate Supply, at full employment
Macroeconomic Equilibrium
– AS = AD
– Or
– S = I
A Keynesian growth model takes a long run perspective.
– Aggregate demand (or savings=investment) still is important, but
– It also includes the aggregate supply
Investment has two impacts:
On expenditures (in the short run)
On capital stock (in the long run)

Keynesian’s growth model graphic
The representation of Keynesian growth model:

Economic growth can be accelerated by
– changing the saving rate
– improving technology.
Saving rates and technology can be changed
– government interventions without consideration to prices
The Harrod-Domar Growth Model
Introduction
The Harrod–Domar model is used in development economics to explain an economy's growth rate in terms of the level of saving and productivity of capital. It suggests that there is no natural reason for an economy to have balanced growth.
This model suggests savings provide the funds which are borrowed for investment purposes.
The model suggests that the economy's rate of growth depends on two factors:
• the level of saving
• the productivity of investment i.e. the capital output ratio
At the beginning the Harrod-Domar model was developed to help analyse the business cycle. However, it was later adapted as an explanation of economic growth. It concluded that:
•