If the capital-output ratio or capital coefficient ( k = { K \ over Y } ) is constant, the rate of growth of Y is equal to the rate of growth of K.
2.
In macroeconomics, following the Harrod Domar model, the savings ratio ( s ) and the capital coefficient ( k ) are regarded as critical factors for accumulation and growth, assuming that all saving is used to finance fixed investment.
3.
A country might for example save and invest 12 % of its national income, and then if the capital coefficient is 4 : 1 ( i . e . $ 4 billion must be invested to increase the national income by 1 billion ) the rate of growth of the national income might be 3 % annually.
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