Figure 1 reproduces the textbook diagram for the steady-state of the Solow model. The
steady-state capital intensity (capital per worker), which is given by the intersection of the
investment function and the depreciation function, determines the steady-state income (output
per worker), which is shown as point A. The subsequent textbook exercise is to ask what
happens with the steady-state income if there is an exogenous increase in the investment rate.
As it turns out, a higher share of investment in GDP means a higher steady-state income on
the same production function, shown as point A
. So the diagram seems to imply that the
Solow model can be estimated by regressing output per worker on the share of investment in
GDP conditional on a constant level of technology, which is the approach chosen by MRW.