IDEAS home Printed from https://ideas.repec.org/a/bus/jphile/v7y2013i1n1.html
   My bibliography  Save this article

Growth theory after Keynes, part I: the unfortunate suppression of the Harrod-Domar model

Author

Listed:
  • Hendrik Van den Berg

    (University of Nebraska-Lincoln)

Abstract

After Harrod and Domar independently developed a dynamic Keynesian circular flow model to illustrate the instability of a growing economy, mainstream economists quickly reduced their model to a supply side-only growth model, which they subsequently rejected as too simplistic and replaced with Solow’s neoclassical growth model. The rejection process of first diminishing the model and then replaced it with a neoclassical alternative was similar to how the full Keynesian macroeconomic paradigm was diminished into IS-LM analysis and then replaced by a simplistic neoclassical framework that largely ignored the demand side of the economy. Furthermore, subsequent work by mainstream economists has resulted in a logically inconsistent framework for analyzing economic growth; the popular endogenous growth models, which use Schumpeter’s concept of profit-driven creative destruction to explain the technological change that Solow left as exogenous, are not logically compatible with the Solow model.

Suggested Citation

  • Hendrik Van den Berg, 2013. "Growth theory after Keynes, part I: the unfortunate suppression of the Harrod-Domar model," The Journal of Philosophical Economics, Bucharest Academy of Economic Studies, The Journal of Philosophical Economics, vol. 7(1), November.
    • Handle: RePEc:bus:jphile:v:7:y:2013:i:1:n:1
    as

    Download full text from publisher

    File URL: http://jpe.ro/pdf.php?id=4995
    Download Restriction: no
    File URL: http://jpe.ro/?id=revista&p=291
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Francisco L. Rivera-Batiz & Luis A. Rivera-Batiz, 2018. "Economic Integration and Endogenous Growth," World Scientific Book Chapters, in: Francisco L Rivera-Batiz & Luis A Rivera-Batiz (ed.), International Trade, Capital Flows and Economic Development, chapter 1, pages 3-32, World Scientific Publishing Co. Pte. Ltd..
    2. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    3. Leamer, Edward E, 1983. "Let's Take the Con Out of Econometrics," American Economic Review, American Economic Association, vol. 73(1), pages 31-43, March.
    4. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
    5. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    6. David C. Colander & Harry Landreth (ed.), 1996. "The Coming Of Keynesianism To America," Books, Edward Elgar Publishing, number 451.
    7. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-183, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Campano, Fred & Laureti, Lucio & Salvatore, Dominick, 2017. "Capturing the effects of changing capital-intensity on Long-term growth in the major emerging economies," Journal of Policy Modeling, Elsevier, vol. 39(4), pages 729-740.
    2. Mahatma Kufepaksi & Gunawan -, 2018. "The Role of Intellectual Capital in Overcoming the Slowing Economic Growth in Indonesia," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(10), pages 1-97, October.
    3. Salvatore, Dominick & Campano, Fred, 2019. "Global implications of U.S. trade policies for reducing structural trade imbalances," Journal of Policy Modeling, Elsevier, vol. 41(3), pages 537-545.
    4. Pingle, Mark & Guerrero, Federico & Mahmoudi, Mina & Wuthisatian, Rattaphon, 2023. "A Descriptive Growth Model with Unemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 482-500.
    5. Mustafa Orhan Özer, 2022. "The Relationship between Economic Growth and Unemployment Rate: Fractional Frequency Fourier ARDL Bounds Test Approach," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 72(72-1), pages 269-292, June.
    6. Salvatore, Dominick & Campano, Fred, 2018. "Simulating some of the administration’s trade policies," Journal of Policy Modeling, Elsevier, vol. 40(3), pages 636-646.
    7. Campano, Fred & Costantiello, Alberto & Laureti, Lucio & Salvatore, Dominick, 2020. "Why does Europe grow more slowly than the United States?," Journal of Policy Modeling, Elsevier, vol. 42(4), pages 903-912.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael Peneder & Karl Aiginger & Gernot Hutschenreiter & Markus Marterbauer, 2001. "Structural Change and Economic Growth," WIFO Studies, WIFO, number 20668, February.
    2. Jones, Charles I., 2005. "Growth and Ideas," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 16, pages 1063-1111, Elsevier.
    3. Egle Tafenau, 2004. "Modelling the Economic Growth of the Countries in the Baltic Sea Region," University of Tartu - Faculty of Economics and Business Administration, in: Tiiu Paas & Egle Tafenau (ed.), Modelling the Economies of the Baltic Sea Region, edition 1, volume 17, chapter 2, pages 54-91, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    4. R Burger & S du Plessis, 2011. "Examining the Robustness of Competing Explanations of Slow Growth in African Countries," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 35(3), pages 21-47, December.
    5. repec:ebl:ecbull:v:2:y:2002:i:1:p:1-15 is not listed on IDEAS
    6. Chen, Binkai & Lin, Justin Yifu, 2021. "Development strategy, resource misallocation and economic performance," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 612-634.
    7. Gene M. Grossman & Elhanan Helpman, 1994. "Endogenous Innovation in the Theory of Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 23-44, Winter.
    8. Durlauf, Steven N. & Quah, Danny T., 1999. "The new empirics of economic growth," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 4, pages 235-308, Elsevier.
    9. Bayraktar-Sağlam, Bahar & Yetkiner, Hakan, 2014. "A Romerian contribution to the empirics of economic growth," Journal of Policy Modeling, Elsevier, vol. 36(2), pages 257-272.
    10. Rao, B. Bhaskara & Vadlamannati, Krishna Chaitanya, 2011. "Globalization and growth in the low income African countries with the extreme bounds analysis," Economic Modelling, Elsevier, vol. 28(3), pages 795-805, May.
    11. Harald Badinger & Gabriele Tondl, 2003. "Trade, Human Capital and Innovation: The Engines of European Regional Growth in the 1990s," Advances in Spatial Science, in: Bernard Fingleton (ed.), European Regional Growth, chapter 7, pages 215-239, Springer.
    12. John Knight & Sai Ding, 2008. "Why has China Grown so Fast? The Role of Structural Change," Economics Series Working Papers 415, University of Oxford, Department of Economics.
    13. Agnieszka Gehringer & Inmaculada Martinez-Zarzoso & Felicitas Nowak.Lehmann Danziger, 2013. "The Determinants of Total Factor Productivity in the EU: Insights from Sectoral Data and Common Dynamic Processes," EcoMod2013 5343, EcoMod.
    14. Jie Li & Robert Ayres, 2008. "Economic Growth and Development: Towards a Catchup Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(1), pages 1-36, May.
    15. Akçomak, I. Semih & ter Weel, Bas, 2009. "Social capital, innovation and growth: Evidence from Europe," European Economic Review, Elsevier, vol. 53(5), pages 544-567, July.
    16. Cem Ertur & Wilfried Koch, 2007. "Growth, technological interdependence and spatial externalities: theory and evidence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(6), pages 1033-1062.
    17. Klenow, Peter J. & Rodriguez-Clare, Andres, 2005. "Externalities and Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 11, pages 817-861, Elsevier.
    18. Julia Wörz, 2005. "Skill Intensity in Foreign Trade and Economic Growth," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 117-144, March.
    19. Mirajul Haq & Muhammad Luqman, 2014. "The contribution of international trade to economic growth through human capital accumulation: Evidence from nine Asian countries," Cogent Economics & Finance, Taylor & Francis Journals, vol. 2(1), pages 1-13, December.
    20. Thomas Ziesemer, 2018. "Testing the Growth Links of Emerging Economies: Croatia in a Growing World Economy," Bulletin of Applied Economics, Risk Market Journals, vol. 5(1), pages 1-27.
    21. Saïd Hanchane & Abdouni Abdeljabbar, 2004. "La dynamique de la croissance économique et de l'ouverture dans les pays en voie de développement : quelques investigations empiriques à partir des données de Panel," Working Papers halshs-00083720, HAL.

    More about this item

    Keywords

    paradigm; macroeconomics; mainstream; Schumpeter; Solow;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bus:jphile:v:7:y:2013:i:1:n:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Valentin Cojanu (email available below). General contact details of provider: https://edirc.repec.org/data/aseeero.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.