Generalizations of Optimal Growth Theory: Stochastic Models, Mathematics, and Meta-Synthesis

In previous papers (Spear and Young 2014, 2015), we surveyed the origins, evolution and dissemination of optimal growth, two sector and turnpike models up to the early 1970s. Regarding subsequent developments in growth theory, a number of prominent observers, such as Fischer (1988), Stern (1991) and McCallum (1996) maintained that after significant progress in the 1950s and 1960s, economic growth theory "received relatively little attention for almost two decades" (Fischer, 1988, 329), and that "by the late 1960s early 1970s, research on the theory of growth more or less stopped" (Stern, 1991, 259). Stern went on to say "the latter half of the 1980s saw a rekindling of growth theory, particularly in the work of Romer… and Lucas" (1991, 259), that is to say, in the form of "endogenous growth" models. McCallum, for his part, wrote (1996, 41) "After a long period of quiescence, growth economics has in the last decade (1986-1995) become an extremely active area of research." Moreover, Brock and Mirman’s (1972) paper was the sole "extension" of Ramsey-Cass-Koopmans to a "stochastic environment" mentioned by McCallum (1996, 49).