In this article four economic development models are described. The first one is the basis of the neoclassical theory of economic growth, the Solow model which deals with the exogenous growth. The second model is from Keynes. The third one is the Harrod-Domar model which is the basis of the Postkeynesian theory of economic growth and the last model deals with the endogenous growth and forms the basis for the new-classical theory of economic growth.
In the following four different models are indicated with the help of the method of the literature-based analysis. In every economic development model the origin, the acceptances and the criticism are performed and the frame of this work is not enough to give every derivation. In the end the result summarizes this housework.
Table of Contents
1 Introduction
2 Solow growth model
2.1 Origin of the model
2.2 Assumptions of the model
2.3 Criticism of the model
3 Keynesian growth model
3.1 Origin of the model
3.2 Assumptions of the model
3.3 Criticism of the model
4 Harrod-Domar growth model
4.1 Origin of the model
4.2 Assumptions of the model
4.3 Criticism of the model
5 New growth model
5.1 Origin of the model
5.2 Assumptions of the model
5.3 Criticism of the model
6 Conclusion
Objectives and Topics
The primary objective of this work is to provide a comparative overview of four distinct economic development models to explain the mechanisms behind economic growth, while utilizing literature-based analysis to examine their origins, fundamental assumptions, and associated criticisms.
- Neoclassical theory and the Solow growth model (exogenous growth).
- Keynesian economic growth theory and the IS-LM framework.
- Postkeynesian perspectives through the Harrod-Domar growth model.
- Modern endogenous growth theories and the role of technological progress.
Excerpt from the Book
2.2 Assumptions of the model
The Solow model assumes from the fact that only one single property is produced. The production of this good is described by a response function. The produced property, called output, can be consumed, or it can be invested. With it is believed that the not consumed income raises the capital floor. The existing capital floor wears out, so that constantly a steady percentage becomes useless in capital goods. The inhabitants of this theoretical world consume, is accepted, a steady part of her income, besides, the number of the inhabitants rises with a steady growth rate. The model subordinates full employment and perfect competition.
Summary of Chapters
1 Introduction: Provides an overview of the development of economic thought and introduces the four growth models analyzed in the study.
2 Solow growth model: Explains the neoclassical basis of exogenous growth, focusing on the production function and capital accumulation.
3 Keynesian growth model: Discusses the emergence of Keynesian economics during the Great Depression and illustrates the IS-LM model.
4 Harrod-Domar growth model: Analyzes the Postkeynesian approach to the instability of growth and the interaction between savings and investments.
5 New growth model: Examines the endogenous growth theory and the shift toward understanding technological progress as an internal factor.
6 Conclusion: Synthesizes the four models and discusses their utility in providing insights into real-world economic dynamics.
Keywords
Economic growth, Solow model, Keynesian theory, Harrod-Domar model, endogenous growth, neoclassical theory, capital accumulation, technological progress, exogenous growth, IS-LM model, macroeconomics, production function, steady state, liquidity case, Postkeynesianism.
Frequently Asked Questions
What is the core subject of this publication?
The work explores various economic development models that aim to explain the drivers and long-term trends of economic growth in national economies.
Which theoretical frameworks are analyzed in this work?
The study examines the Solow growth model, the Keynesian growth model, the Harrod-Domar growth model, and the New (endogenous) growth model.
What is the primary goal of the author?
The goal is to systematically present the origin, underlying assumptions, and criticisms of four key economic models to give a structured overview of the theory of economic growth.
Which research methodology is employed?
The work uses a literature-based analysis to evaluate and compare existing economic growth theories.
What topics are covered in the main body?
The main body breaks down each model into its specific origins, the assumptions defining the production or equilibrium, and the critical feedback regarding their limitations.
Which terms characterize this research?
Key terms include economic growth, endogenous and exogenous growth factors, capital accumulation, and market equilibrium.
How does the Solow model differ from endogenous growth models?
The Solow model treats technological progress as an exogenous factor, whereas endogenous growth models attempt to explain technological progress from within the system.
What is the significance of the "Harrod paradox" mentioned in the text?
The paradox suggests that idle capacities in an economy arise not necessarily because of over-investment, but because of a lack of sufficient investment to meet specific growth requirements.
How does the author interpret the role of knowledge in modern growth theory?
Knowledge is viewed as a form of capital that contributes to production and is used to justify the assumption of steady marginal returns in endogenous growth models.
- Quote paper
- Anonym (Author), 2015, Different visions of economic development. From Keynes to the Solow Growth, Harrod Domar Growth and the New Growth Model, Munich, GRIN Verlag, https://www.grin.com/document/310383
