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Solovian and New Growth Theory from the Perspective of Allyn Young on Macroeconomic Increasing Returns

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  • Roger J. Sandilands

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.

Suggested Citation

  • Roger J. Sandilands, 2009. "Solovian and New Growth Theory from the Perspective of Allyn Young on Macroeconomic Increasing Returns," History of Political Economy, Duke University Press, vol. 41(5), pages 285-303, Supplemen.
    • Handle: RePEc:hop:hopeec:v:41:y:2009:i:5:p:285-303
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    Cited by:

    1. Nikolaos Chatzarakis & Persefoni Tsaliki, 2026. "Knife-Edge Instability and the Rate of Surplus Value: Theory and Empirical Evidence," Review of Radical Political Economics, Union for Radical Political Economics, vol. 58(1), pages 42-58, March.

    More about this item

    Keywords

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    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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