TY - JOUR
T1 - Solovian and new growth theory from the perspective of Allyn Young on macroeconomic increasing returns
AU - Sandilands, R.J.
N1 - Also available as a working paper (2009): http://www.strath.ac.uk/media/departments/economics/researchdiscussionpapers/2009/09-07RJS.pdf
PY - 2009
Y1 - 2009
N2 - 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.
AB - 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.
KW - Solow model
KW - aggregate production function
KW - Allyn Young
KW - endogenous growth theory
KW - macroeconomic increasing returns
UR - http://www.strath.ac.uk/media/departments/economics/researchdiscussionpapers/2009/09-07RJS.pdf
UR - http://dx.doi.org/10.1215/00182702-2009-028
U2 - 10.1215/00182702-2009-028
DO - 10.1215/00182702-2009-028
M3 - Article
VL - 41
SP - 285
EP - 303
JO - History of Political Economy
JF - History of Political Economy
SN - 0018-2702
ER -