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Savings and Economic Growth in Neoclassical Theory

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  • Cesaratto, Sergio

Abstract

In neoclassical economics economic growth depends upon savings. The paper discusses problems with this conventional view, and how these have been tackled, from pre-Solowian authors up to the recent New or Endogenous Growth Theory (EGT). These difficulties became particularly clear with the Solow-Swan model of growth in which the savings rate did not affect the rate of growth. In the absence of exogenous circumstances, savings would only depress the marginal productivity of capital forcing the economy towards a stationary state. The paper interprets EGT as an attempt to react to this gloomy theoretical prospect. The paper examines various difficulties with this attempt. Copyright 1999 by Oxford University Press.

Suggested Citation

  • Cesaratto, Sergio, 1999. "Savings and Economic Growth in Neoclassical Theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 23(6), pages 771-793, November.
    • Handle: RePEc:oup:cambje:v:23:y:1999:i:6:p:771-93
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    Citations

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    Cited by:

    1. Sergio Cesaratto, 2010. "Endogenous Growth Theory Twenty Years On: A Critical Assessment," Bulletin of Political Economy, Bulletin of Political Economy, vol. 4(1), pages 1-30, June.
    2. Constantinos Alexiou, 2004. "An Econometric Investigation into the Macroeconomic Relationship between Investment and Saving: Evidence from the EU Region," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(1), pages 1-14.
    3. Sergio Cesaratto, 2012. "Neo-Kaleckian and Sraffian controversies on accumulation theory," Department of Economics University of Siena 650, Department of Economics, University of Siena.
    4. Esteban Pérez Caldentey & Matías Vernengo, 2016. "Reading Keynes in Buenos Aires: Prebisch and the Dynamics of Capitalism," Cambridge Journal of Economics, Oxford University Press, vol. 40(6), pages 1725-1741.
    5. Sergio Cesaratto, 2016. "The modern revival of the Classical surplus approach: implications for the analysis of growth and crises," Department of Economics University of Siena 735, Department of Economics, University of Siena.
    6. Alexiadis Stilianos & Christos Ap. LADIAS, 2011. "Optimal Allocation Of Investment And Regional Disparities," Regional Science Inquiry, Hellenic Association of Regional Scientists, vol. 0(2), pages 45-59, December.
    7. Sergio Cesaratto, 2002. "The Economics of Pensions: A non-conventional approach," Review of Political Economy, Taylor & Francis Journals, vol. 14(2), pages 149-177.
    8. Omar Masood & Priya Darshini Pun Thapa & Olivier Levyne & Frederic Teulon & Rabeb Triki, 2014. "Does Co-integration and Causal Relationship Exist between the Non- stationary Variables for Chinese Bank’s Profitability? An Empirical Evidence," Working Papers 2014-249, Department of Research, Ipag Business School.
    9. Daniele Girardi & Riccardo Pariboni, 2020. "Autonomous demand and the investment share," Review of Keynesian Economics, Edward Elgar Publishing, vol. 8(3), pages 428-453, July.
    10. Yaya Keho, 2011. "Long‐Run Determinants Of Savings Rates In Waemu Countries: An Empirical Assessment From Ardl Bounds Testing Approach," South African Journal of Economics, Economic Society of South Africa, vol. 79(3), pages 312-329, September.
    11. Constantinos Alexiou, 2004. "An Econometric Investigation into the Macroeconomic Relationship between Investment and Saving: Evidence from the EU Region," International Review of Applied Economics, Taylor & Francis Journals, vol. 18(1), pages 1-14.
    12. Mario Pomini, 2006. "Accumulation of knowledge and increasing returns in neoclassical models," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 53(2), pages 135-156, June.
    13. Jamee K. Moudud, 2010. "Strategic Competition, Dynamics, and the Role of the State," Books, Edward Elgar Publishing, number 4241.
    14. Mario Pomini & Giovanni Tondini, 2006. "The idea of increasing returns in neoclassical growth models," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 13(3), pages 365-386.
    15. repec:hrs:journl:v:3:y:2011:i:2:p:45-59 is not listed on IDEAS
    16. Singh, Tarlok, 2010. "Does domestic saving cause economic growth? A time-series evidence from India," Journal of Policy Modeling, Elsevier, vol. 32(2), pages 231-253, March.
    17. Sergio Cesaratto & Franklin Serrano & Antonella Stirati, 2003. "Technical Change, Effective Demand and Employment," Review of Political Economy, Taylor & Francis Journals, vol. 15(1), pages 33-52.
    18. Constantinos Alexiou & Joseph Nellis, 2012. "Is the EURO' a Defunct Currency?," International Journal of Economics and Financial Issues, Econjournals, vol. 2(3), pages 296-303.
    19. Muhammad Fadli Hanafi & Berly Martawardaya & Andi M. Alfian Parewangi, 2014. "The Contribution of Saving and Loan onn Economic Growth, The Case of Indonesia," EcoMod2014 7238, EcoMod.

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