The golden rule of accumulation: a fable for growthmen
01 Jan 1961-Vol. 51, Iss: 4, pp 638-643
TL;DR: In this paper, the authors present an understanding of Solovian growth and the economic growth issue and discuss the way in which a brilliant peasant named Oiko Nomos claimed a prize for optimum investment ratio.
Abstract: This chapter presents an understanding of Solovian growth and the economic growth issue It discusses the way in which a brilliant peasant named Oiko Nomos claimed a prize for optimum investment ratio The Solovians were deeply impressed by Oiko and his theorems Oiko suggested that associated with the golden-rule path is a unique capital–output ratio If one's present capital–output ratio is smaller, then consumption must be slowed until the ratio is no longer deficient If the present ratio exceeds the golden-rule ratio, then consumption must be made at a fast rate until the capital–output ratio is no longer excessive The chapter discusses the way in which the kingdom followed the golden rule of accumulation
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Cites background from "The golden rule of accumulation: a ..."
...(17T) q= UV), which simply states that the limiting quasi-stationary path is nothing more than the golden rule path, denoted by (C, z, k), discussed, for example, by Phelps [2]....
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01 Jan 2016
TL;DR: In this article, the authors examined the long-run competitive equilibrium in a growth model and explored the effects on this equilibrium of government debt in a single-commodity world without durable goods.
Abstract: This paper contains a model designed to serve two purposes, to examine long-run competitive equilibrium in a growth model and then to explore the effects on this equilibrium of government debt. Samuelson [8] has examined the determination of interest rates in a singlecommodity world without durable goods. In such an economy, interest rates are determined by consumption loans between individuals of different ages. By introducing production employing a durable capital good into this model, one can examine the case where individuals provide for their retirement years by lending to entrepreneurs. After describing alternative long-run equilibria available to a centrally planned economy, the competitive solution is described. In this economy, which has an infinitely long life, it is seen that, despite the absence of all the usual sources of inefficiency, the competitive solution can be inefficient. Modigliani [4] has explored the effects of the existence of government debt in an aggregate growth model. By introducing a government which issues debt and levies taxes to finance interest payments into the model described in the first part, it is possible to re-examine his conclusions in a model where consumption decisions are made individually, where taxes to finance the debt are included in the analysis, and where the changes in output arising from changes in the capital stock are explicitly acknowledged. It is seen that in the "normal" case external debt reduces the utility of an individual living in long-run equilibrium. Surprisingly, internal debt is seen to cause an even larger decline in this utility level. External debt has two effects in the long run, both arising from the taxes needed to finance the interest payments. The taxes directly reduce available lifetime consumption of the individual taxpayer. Further, by reducing his disposable income, taxes reduce his savings and thus the capital stock. Internal debt has both of these effects as well as a further reduction in the capital stock arising from the substitution of government debt for physical capital in individual portfolios.
1,043 citations
TL;DR: In this paper, the relative fixity of capital is introduced explicitly into the formulation of the firm's maximum problem and used this formulation to obtain a precise definition of the industry's "short run" and "long run" equilibrium posi-
Abstract: T ills paper contains a re-examination from a dynamic point of view of some familiar problems in the theory of supply. In particular, it is concerned with the response of firms in a competitive industry to once-and-for-all shifts in the industry demand curve, to changes in the rate of shift in this demand curve, and to changes in the prices of factors of production. In most respects, our discussion of these issues will proceed along the lines of the traditional Marshall-Viner theory of supply. The novelty of our treatment will lie in its attempt to introduce the relative "fixity" of capital explicitly into the formulation of the firm's maximum problem and to use this formulation to obtain a precise definition of the industry's "shortrun" and "long-run" equilibrium posi-
947 citations
Posted Content•
TL;DR: The authors assess what we now know about economic growth and present their own views as cogently as they can on what we know about the growth of nations, as well as their own view on the reasons for these differences.
Abstract: AVERAGE INCOMES in the world's richest countries are more than ten times as high as in the world's poorest countries. It is apparent to anyone who travels the world that these large differences in income lead to large differences in the quality of life. Less apparent are the reasons for these differences. What is it about the United States, Japan, and Germany that makes these countries so much richer than India, Indonesia, and Nigeria? How can the rich countries be sure to maintain their high standard of living? What can the poor countries do to join the club? After many years of neglect, these questions are again at the center of macroeconomic research and teaching. Long-run growth is now widely viewed to be at least as important as short-run fluctuations. Moreover, growth is not just important. It is also a topic about which macroeconomists, with their crude aggregate models, have something useful to say. My goal here is to assess what we now know about economic growth. The scope of this paper is selective and, to some extent, idiosyncratic. The study of growth has itself grown so rapidly in recent years that it would take an entire book to discuss the field thoroughly.' In this paper, I do not try to lay out the many different views in the large literature on economic growth. Instead, I try to present my own views, as cogently as I can, on what we know about the growth of nations.
847 citations
TL;DR: In this paper, the authors describe the experience of walking through a department store and being amazed at the many different articles we see there, one counter after another filled with this, that, and the other thing-some useful, some of little or no use.
Abstract: We've all had the experience at some time or other of walking through a department store and being amazed at the many different articles we see there. One counter after another filled with this, that, and the other thing-some useful, some of little or no use. Almost every day a new gadget is advertised, electric blankets, or hats that look like chimneys, or a special kind of vitamin tablets. A common reaction of people as they look in shop windows is, "What will they think of next?"This article can also be found at the Monthly Review website, where most recent articles are published in full.Click here to purchase a PDF version of this article at the Monthly Review website.
716 citations
References
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TL;DR: In this paper, a model of long run growth is proposed and examples of possible growth patterns are given. But the model does not consider the long run of the economy and does not take into account the characteristics of interest and wage rates.
Abstract: I. Introduction, 65. — II. A model of long-run growth, 66. — III. Possible growth patterns, 68. — IV. Examples, 73. — V. Behavior of interest and wage rates, 78. — VI. Extensions, 85. — VII. Qualifications, 91.
20,482 citations
3,961 citations
Book•
01 Jan 1951
TL;DR: The Routledge Classics edition by Tadeusz Kowalik Translator's Note A Note on Rosa Luxemburg Introduction Part 1: The Problem of Reproduction Part 2: Historical Exposition of the Problem Part 3: The Historical Conditions of Accumulation Index as mentioned in this paper
Abstract: Introduction to the Routledge Classics edition by Tadeusz Kowalik Translator's Note A Note on Rosa Luxemburg Introduction Part 1: The Problem of Reproduction Part 2: Historical Exposition of the Problem Part 3: The Historical Conditions of Accumulation Index
1,395 citations
TL;DR: In this paper, the authors describe the experience of walking through a department store and being amazed at the many different articles we see there, one counter after another filled with this, that, and the other thing-some useful, some of little or no use.
Abstract: We've all had the experience at some time or other of walking through a department store and being amazed at the many different articles we see there. One counter after another filled with this, that, and the other thing-some useful, some of little or no use. Almost every day a new gadget is advertised, electric blankets, or hats that look like chimneys, or a special kind of vitamin tablets. A common reaction of people as they look in shop windows is, "What will they think of next?"This article can also be found at the Monthly Review website, where most recent articles are published in full.Click here to purchase a PDF version of this article at the Monthly Review website.
716 citations
"The golden rule of accumulation: a ..." refers background in this paper
...Differentiating logarithmically, they quickly calculated from (1) and (2") that in a golden age, capital...
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