The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Neoclassical Growth Theory

  • F. H. Hahn
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_704

Abstract

Neoclassical growth theory is mostly that of the equilibrium of a competitive economy through time. It stresses capital accumulation, population growth and technical progress. It distinguishes momentary equilibrium (when the capital stock, the working population and technical know-how are fixed) from long-run equilibrium (when none of these elements is given). Long-run equilibrium is not a sequence of momentary equilibria, since it embodies the rational expectations of agents. The theory has little to say about the ‘animal spirits’ that may determine an economy’s potential growth rate, but provides a good base camp for sallies into the study of particular economies.

Keywords

Accumulation of capital Animal spirits Arrow, K. J. Capital–labour ratio Classical saving function Cobb–Douglas functions Convergence Duality Elasticity of substitution Expectations Factor–price frontier Hahn, F. H. Harrod, R. F. Investment behaviour Kaldor, N. Keynes, J. M. Knife-edge problem Liquidity trap Long-run equilibrium Lucas, R. Meade, J. E. Modigliani, F. Momentary equilibrium Natural and warranted rates of growth Neoclassical economics Neoclassical growth theory New macroeconomics Overlapping generations Population growth Proportional savings assumption Rational expectations equilibrium Robinson, J. V. Samuelson, P. A. Savings Solow, R. Steady-state equilibrium Technical progress Technical progress function Unemployment von Neumann, J. Warranted path Wicksell effect 

JEL Classifications

O4 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • F. H. Hahn
    • 1
  1. 1.