From Neoclassical Growth Theory to New Classical Macroeconomics

Robert Solow

Chapter 2 in Advances in Macroeconomic Theory, 2001, pp 19-29 from Palgrave Macmillan

Abstract: Abstract The puzzle I want to discuss — at least it seems to me to be a puzzle, though part of the puzzle is why it does not seem to be a puzzle to many of my younger colleagues — is this. More than forty years ago, I — and many others, especially Trevor Swan and James Tobin — worked out what has since come to be called neoclassical growth theory. It may not be clear exactly what we or I — I had better speak for myself — thought growth theory applied to, what it was trying to describe. We may have to talk more about that later. But it was clear from the very beginning what I thought it did not apply to, namely short-run fluctuations in aggregate output and employment, what used to be called the business cycle and is now often called that again. In those days I thought growth theory was about the supply side of the economy, whereas the business cycle was mostly to be analysed in terms of changes in aggregate demand.

Keywords: Business Cycle; Real Wage; Growth Theory; Full Employment; Nominal Wage (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-0-333-99275-3_2

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DOI: 10.1057/9780333992753_2

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