IDEAS home Printed from https://ideas.repec.org/a/pal/easeco/v50y2024i1d10.1057_s41302-023-00262-1.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41302-023-00262-1
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41302-023-00262-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Cass, David & Mitra, Tapan, 1991. "Indefinitely Sustained Consumption Despite Exhaustible Natural Resources," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 1(2), pages 119-146, April.
    3. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    4. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    5. William J. Baumol, 1952. "The Transactions Demand for Cash: An Inventory Theoretic Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 66(4), pages 545-556.
    6. E. S. Phelps & J. G. Riley, 1978. "Rawlsian Growth: Dynamic Programming of Capital and Wealth for Intergeneration "Maximin" Justice," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 45(1), pages 103-120.
    7. David Cass, 1965. "Optimum Growth in an Aggregative Model of Capital Accumulation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(3), pages 233-240.
    8. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    9. Irving Fisher, 1907. "Professor Fetter on Capital and Income," Journal of Political Economy, University of Chicago Press, vol. 15(7), pages 421-421.
    10. R. M. Solow, 1974. "Intergenerational Equity and Exhaustible Resources," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(5), pages 29-45.
    11. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    12. Robert W. Dimand, 2019. "The Fisher Diagram and the Neoclassical Theory of Interest and Capital," Great Thinkers in Economics, in: Irving Fisher, chapter 0, pages 75-112, Palgrave Macmillan.
    13. Fisher, Irving, 1907. "The Rate of Interest," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number fisher1907.
    14. Mauro Boianovsky, 1998. "Wicksell, Ramsey and the theory of interest," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 5(1), pages 140-168.
    15. Anthony Brewer, 1995. "The Concept of Growth in Eighteenth-Century Economics," History of Political Economy, Duke University Press, vol. 27(4), pages 609-638, Winter.
    16. Pedro Garcia Duarte, 2010. "Beyond Samuelson's chapter on Ramsey," History of Economic Ideas, Fabrizio Serra Editore, Pisa - Roma, vol. 18(3), pages 121-160.
    17. Robert A. Becker, 1980. "On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(2), pages 375-382.
    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. Ocum Genes Karlo & Maxwell Adea, 2024. "The Effect of Changes in Oil Prices on Economic Development of South Sudan: A Case Study of Juba City Republic of South Sudan," International Journal of Science and Business, IJSAB International, vol. 32(1), pages 106-121.

    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. 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.
    2. Podshivalov, Georgii, 2019. "Observing the Evolution in Macroeconomic Theory," MPRA Paper 97657, University Library of Munich, Germany.
    3. Thomas M. Steger, 2000. "Productive Consumption and Growth in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 365-375, October.
    4. Bode, Eckhardt, 1996. "Ursachen regionaler Wachstumsunterschiede: wachstumstheoretische Erklärungsansätze," Kiel Working Papers 740, Kiel Institute for the World Economy (IfW Kiel).
    5. Voosholz, Frauke, 2014. "A survey on modeling economic growth. With special interest on natural resource use," CAWM Discussion Papers 69, University of Münster, Münster Center for Economic Policy (MEP).
    6. Brautzsch, Hans-Ulrich & Günther, Jutta & Loose, Brigitte & Ludwig, Udo & Nulsch, Nicole, 2015. "Can R&D subsidies counteract the economic crisis? – Macroeconomic effects in Germany," Research Policy, Elsevier, vol. 44(3), pages 623-633.
    7. Pozzolo, Alberto Franco, 2004. "Endogenous Growth in Open Economies - A Survey of Major Results," Economics & Statistics Discussion Papers esdp04020, University of Molise, Department of Economics.
    8. Alejandro Diaz-Bautista, 2005. "Regional Convergence of Income and Labor Productivity in Mexico," Urban/Regional 0512016, University Library of Munich, Germany.
    9. Mariusz Próchniak & Bartosz Witkowski, 2006. "Modelowanie realnej konwergencji w skali międzynarodowej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 10, pages 1-31.
    10. Ikonen, Pasi, 2010. "Effect of finance on growth through more efficient utilization of technological innovations," Bank of Finland Research Discussion Papers 21/2010, Bank of Finland.
    11. Schilirò, Daniele, 2006. "Crescita economica, conoscenza e capitale umano. Le teorie e i modelli di crescita endogena di Paul Romer e Robert Lucas [Economic growth, knowledge and human capital. Theories and models of endoge," MPRA Paper 52435, University Library of Munich, Germany.
    12. repec:ebl:ecbull:v:2:y:2002:i:1:p:1-15 is not listed on IDEAS
    13. Akhand Akhtar Hossain, 2009. "Central Banking and Monetary Policy in the Asia-Pacific," Books, Edward Elgar Publishing, number 12777.
    14. Robert J. Barro & Xavier Sala-i-Martin, 1990. "Economic Growth and Convergence across The United States," NBER Working Papers 3419, National Bureau of Economic Research, Inc.
    15. Oleg Badunenko & Diego Romero-�vila, 2014. "Productivity Growth across Spanish Regions and Industries: A Production-Frontier Approach," Regional Studies, Taylor & Francis Journals, vol. 48(7), pages 1242-1262, July.
    16. 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.
    17. Alejandro Díaz-Bautista & Jorge Eduardo Mendoza Cota, 2004. "Regional Convergence Of Income And Labor Productivity In Mexico," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 3(1), pages 3-20, Marzo 200.
    18. repec:zbw:bofrdp:2010_021 is not listed on IDEAS
    19. Paul Lau, Sau-Him, 1999. "I(0) In, integration and cointegration out:: Time series properties of endogenous growth models," Journal of Econometrics, Elsevier, vol. 93(1), pages 1-24, November.
    20. Gomes, Orlando, 2007. "Externalities in R&D: a route to endogenous fluctuations," MPRA Paper 2850, University Library of Munich, Germany.
    21. Fernandes, Leonardo H.S. & de Araújo, Fernando H.A. & Silva, Igor E.M. & Neto, Jusie S.P., 2021. "Macroeconophysics indicator of economic efficiency," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 573(C).
    22. Nijkamp, Peter & Poot, Jacques, 1993. "Endogenous Technological Change, Innovation Diffusion and Transitional Dynamics in a Nonlinear Growth Model," Australian Economic Papers, Wiley Blackwell, vol. 32(61), pages 191-213, December.

    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

    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:pal:easeco:v:50:y:2024:i:1:d:10.1057_s41302-023-00262-1. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    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.