Solovian and new growth theory from the perspective of Allyn Young on macroeconomic increasing returns

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6 Citations (Scopus)

Abstract

This paper evaluates Solow's neoclassical growth model and related empirical estimates of the sources of growth. Invoking Allyn Young, it is argued that the fundamental sources of growth cannot be measured by the value of factor inputs (including research inputs) without reference to the overall growth of product demand in the economy that both induces and limits increased specialization. What is attributed to the factors-the value of their marginal products-is not a measure of their contribution. Integration does not give the social picture. Young's theory of macroeconomic increasing returns reveals the limitations of models that assume an aggregate production function exhibiting constant returns to scale while "augmented" by exogenous technical progress. His endogenously self-sustaining growth paradigm is also shown to differ in important respects (including in its policy implications) from modern endogenous growth theory.
Original languageEnglish
Pages (from-to)285-303
Number of pages18
JournalHistory of Political Economy
Volume41
DOIs
Publication statusPublished - 2009

Keywords

  • Solow model
  • aggregate production function
  • Allyn Young
  • endogenous growth theory
  • macroeconomic increasing returns

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    • 6 Citations
    • 1 Discussion paper

    Solovian and new growth theory from the perspective of Allyn Young on macroeconomic increasing returns

    Sandilands, R., 2009, Glasgow: University of Strathclyde, 25 p. (Discussion Papers in Economics; vol. 09-07).

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