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Connecting Classical and Early Neoclassical Views on Savings and Capital Formation to Modern Growth Theory Through the Lens of F. P. Ramsey

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  • Francis E. Raymond

    (Bellarmine University)

Abstract

We investigate the origins of modern growth theory using Ramsey’s seminal A Mathematical Theory of Saving (1928) by dividing Ramsey’s optimal savings problem into two principal components, (1) the relationship between personal savings and the formation of capital, and (2) the optimal intertemporal balance between consumption and savings. The first component serves as a philosophical conduit for surveying classical and early neoclassical perspectives on savings and capital formation. The second details early neoclassicists’ consideration of mathematical methods and intergenerational welfare. Taken together, we create a pathway between early discussions of savings and capital formation, and the origins of growth theory.

Suggested Citation

  • Francis E. Raymond, 2024. "Connecting Classical and Early Neoclassical Views on Savings and Capital Formation to Modern Growth Theory Through the Lens of F. P. Ramsey," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 50(1), pages 54-78, January.
    • Handle: RePEc:pal:easeco:v:50:y:2024:i:1:d:10.1057_s41302-023-00262-1
    DOI: 10.1057/s41302-023-00262-1
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    References listed on IDEAS

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    More about this item

    Keywords

    Savings; Capital formation; Time-preference; Intergenerational welfare; Growth;
    All these keywords.

    JEL classification:

    • B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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