which holds in the case of balanced growth equilibrium. In this equation, c is
consumption per capita; k is capital per worker, a is technological progress; θ is index of externality; x is availability of complementary factors of productions, such as infrastructure or human capital; τ is the tax rate; ρ=z+n is the real interest rate; n is population growth; z is the rate of time preference; σ is the inverse of the negative of the elasticity of marginal utility;. If the cost of capital ρ is high for any return on investment, investment is low and the economy is considered liquidity constrained. If the rate of return r is low, for any cost of capital, investment is low and the economy is considered inefficient.