Growth Models: Of Golden Ages and Production Functions
In this paper I intend to ask more questions than I can answer, and mainly to urge that economists need to consider very closely what it is that theories of economic growth are about, what questions they are trying to answer, if economic theory is not merely jejune mathematics. We all know that in models of economic growth we can produce stagnation crises, Malthusian traps, inflation barriers, take-off instability situations, even trade cycles, at the drop of a symbolic cliché. The trouble is that any one of quite a lot of clichés will do. We also know that if we were asked to think about a five-year plan for India we would not look to economic theory for ready answers: we would need to learn a great deal about India, about people, about practical techniques and we would not hope for more from economic theory than that it might help us with some basic insights as to how to set about the task. Again, an analytical framework for the economic history of the past may not have much application to the future, if we think of the future (as Keynes did) in terms of ‘a somewhat comprehensive socialization of investment’. Can we conceive of the existence of a theory of economic growth (long-run dynamics, if you like) which would neither be too closely tied to a particular historical situation nor resemble a game of entrepreneurial blindman’s buff, but would provide some relevant insights ? — not a description of reality but (as Joan Robinson says) ‘ a device for sorting out our ideas’?
KeywordsProduction Function Capital Stock Technical Progress Capital Good Capital Ratio
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