Samuelson and Modigliani: The Unseemly Paradox
The last system to be analysed in this section of neoclassical models of growth will be the tour de force prepared by Paul Samuelson and Franco Modigliani1 in reaction to a limited growth model put forward by Luigi Pasinetti.2 The paper’s more technical treatment of the Pasinetti model will be dealt with only briefly at this stage as the formal presentation of Pasinetti’s system will not appear until Chapter 10. More important than the criticism, however, is the neoclassical model that Samuelson and Modigliani formulate in their paper. It will be outlined and its claims analysed on its own merit as a neoclassical model of economic growth.
KeywordsProduction Function Real Wage Marginal Product Neoclassical Model Perfect Competition
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- 2.L. L. Pasinetti, ‘Rate of Profit and Income Distribution in Relation to Economic Growth’, Review of Economic Studies, xxix (Oct. 1962) 267 - 79.Google Scholar