The instability principle revisited: an essay in Harrodian dynamics

Olivier Bruno and Muriel Dal-Pont Legrand
Authors registered in the RePEc Author Service: Muriel DAL PONT LEGRAND

The European Journal of the History of Economic Thought, 2014, vol. 21, issue 3, 467-484

Abstract: Harrod's contribution to economic dynamics is very often reduced to the dynamic equation whose character is unstable. Growth theory and cycle theory based on Harrod's contributions aimed at reducing this instability. Following Harrod, who was strongly opposed to the 'knife-edge' interpretation, we define the warranted rate of growth as a 'moving equilibrium' and focus on its interaction with the effective rate of growth. Our simple Harrodian model generates various dynamics from stable path, to growth cycle and corridor of stability.

Date: 2014
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Citations: View citations in EconPapers (5)

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DOI: 10.1080/09672567.2012.683023

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