英语论文网

d that capitalist system is unstable. They stressed the importance of capital accumulation in g and that the primary source of stimulus is the government. They used production function by with little substitutability among the inputs to prove their claim. Although, this idea attracted many attention of economist at the time (during and after Great Depression), but this analyze plays little role in today.

The subsequent neoclassical g model was introduced by Solow (1956), Swan (1956) Cass (1965) and Koopmas (1965).

Solow (1956) and Swan (1956) proposed an exogenous growth theory in neoclassical framework, known as Solow-Swan model. They used production function by constant returns to scale with two factors of productions labor and capital. The model characterized by constant returns to scale, diminishing returns to each inputs, positive elasticity of substitution between them and the assumption that market function well (Barro 1991).

Neoclassical growth theory, as developed by Solow (1956) and his followers, has dominated economists' thinking about long-term or 'trend' movements in per capita income for more than three decades. Solow focused attention on the process of capital formation. Aggregate savings, he argued, finance additions to the national capital stock. An economy with an initially low capital-labor ratio will have a high marginal product of capital. Then, if a constant fraction of the income generated by a new piece of equipment is saved, the gross investment in new capital goods may exceed the amount needed to offset depreciation and to equip new members of the workforce. Over time, capital per worker will rise, which (with constant returns to scale and a fixed technology) will generate a decline in the marginal product of capital. But if the marginal product continues to fall, the savings generated by the income accruing to new capital also will fall, and will eventually be only just sufficient to replace worn-out machines and equip new workers. At this point the economy enters a stationary state with an unchanging standard of living.(Grossman and Helpman 1994)

The new-classical model is in agreement with Malthus and Ricardo in that per capita growth will eventually cease when there are no more improvements in technology duo to diminishing returns of capital. It observed that positive rates of per capita growth can persist over a century or more and that these growth rates have no clear tendency to decline.

In overall, the standard neo classical growth model implies that in steady state equilibrium, the level of GDP per capita will be determined by the prevailing technology and exogenous rates of saving, population growth and technical progress. They conclude that different saving rates and population growth rates might affect different countries steady state level of per capita income.

One of the important concepts in the neoclassical g model that derives from the assumption of diminishing returns is the theory of convergence. The lower the starting level of per capita GDP, relative to the long run steady state position, the faster the growth rate. Economies that have less capital per worker tend to have higher rates of return and higher growth rates.

The convergence is conditional because the steady-state levels of capital and output per worker depend, in the Solow-Swan model, on the saving rate, the growth rate of po