Investment and Growth — Kaldor’s Growth Model

Abstract

The main components of Kaldor’s growth model are as follows: the technical progress function (T.P.F.) of section 9.3; an assumption of constant labour-force growth; and the six main assumptions underlying the distribution model of section 11.3, except that assumption (ii)—that investment is exogenous—is replaced by an investment function. The model has appeared in three versions (Kaldor, 1957; 1961; and Kaldor and Mirrlees, 1962). The investment function is different in each; also, the first version uses period rather than continuous analysis, and in the third version vintage capital is introduced. Although the first and second versions may be regarded as obsolete predecessors of the third, the development of the model and the differences among the three versions are of some interest. It is therefore the first version which we shall examine at length; and the later amendments will be considered more briefly.