Growth and Distribution
Duncan K. Foley
Thomas R. Michl
Preface
Notation
1. Introduction
Economic Growth in Historical Perspective
Quality and Quantity
Human Relationships
Economic Theories of Growth
Suggested Readings
2. Measuring Growth and Distribution
Measuring Output and Inputs
Time and Production
A Note on Units
Technology in the Real World
The Uses of Output: Investment and Consumption
The Social Consumption-Growth Rate Schedule
The Distribution of Income: Wages and Profit
The Real Wage-Profit Rate Schedule
Income Shares
The Growth-Distribution Schedule
Changes in Labor and Capital Productivity
Comparing Economies
Global Economic Leadership
Labor Productivity Growth in Real Economies
Stylized Facts
Suggested Readings
3. Models of Production
Accounting Frameworks and Explanatory Models
A Model of Production
Agents and Distribution
Choice of Technique and Production Functions
Particular Production Functions
The Leontief Production Function
The Cobb-Douglas Production Function
Classifying Technical Change
Two-sector Growth-Distribution Schedules
Models of Production and Models of Growth
Suggested Readings
4. The Labor Market
Models of Economic Growth
Labor Supply and Demand
The Classical Conventional Wage Model
The Neoclassical Full Employment Model
Toward a Model of Economic Growth
Growth in Real Economies
Suggested Readings
5. Models of Consumption and Saving
A Two-Period Consumption-Saving Model
Solving the Two-period Consumption Problem
An Infinite-Horizon Model
Solving the Infinite-Horizon Problem
The Constant Saving Rate Model
Saving Rates and Growth Rates
Suggested Readings
6. Classical Models of Economic Growth
The Classical Conventional Wage Model
Comparative Dynamics in the Conventional Wage Model
Labor-Saving Technical Change in the Classical Model
Choice of Technique in the Classical Model
A Classical Model of Growth with Full Employment
Choice of Technique in the Classical Full-Employment Model
The Classical Approac to Growth
Suggested Readings
7. Biased Technical Change in the Classical Model
The Classical Conventional Wage Share Model with Biased Technical Change
Viability of Technical Change
Biased Technical Change and the Fossil Production Function
Convergence and the Classical Model
One Vision of Economic Growth
Suggested Readings
8. The Neoclassical Growth Model
The Solow-Swan Model
The Intensive Production Function
Saving, Population, and Steady State Growth
The Solow-Swan Model and the Growth-Distribution Schedule
The Complete Model
Substitution and Distribution
Comparative Dynamics
Transitional Dynamics
Limitations of the Solow-Swan Model
Suggested Readings
9. Technical Change in the Neoclassical Model
Technical Change and the Production Function
The Solow-Swan Model with Harrod-Neutral Technical Change
Growth Accounting
Classical and Neoclassical Interpretations of the Residual
Comparative Steady State Dynamics in the Solow-Swan Model
Transitional Dynamics in the Solow-Swan Model
Suggested Readings
10. Investment Constrained Economic Growth
Saving, Investment, and Output
A Model of Investment Constrained Growth
Equilibrium in the Investment Constrained Model
Comparative Dynamics in the Investment Constrained Model
Profit-Led or Wage-Led Growth?
Long Run or Short Run?
The Keynesian Contribution to Growth Theory
Suggested Readings
11. Land-Limited Growth
Non-Reproducible Resources
Ricardo's Stationary State
Production with Land
The Capitalist's Decision Problem with Land
The Arbitrage Principle
Equilibrium Conditions
The Abundant Land Regime
The Scarce Land Regime
From the Abundant to the Scarce Land Regime
Lessons of the Land-Limited Model
Suggested Readings
12. Exhaustible Resources
Growth with an Exhaustible Resource
Production with an Exhaustible Resource
Saving and Portfolio Choice
The Growth Path
Exhaustible Resources in the Real World
Suggested Readings
13. Government Debt and Social Security: The Overlapping Generations Model
Government Finance and Accumulation
Government and Private Budget Constraints
Saving and Consumption with Selfish Households
A Classical Overlapping Generations Growth Model
A Neoclassical Overlapping Generations Growth Model
Pareto-efficiency in the Overlapping Generations Model
Analyzing Social Security and Budget Deficits
Social Security in the Overlapping Generations Model
Fully Funded Social Security
Unfunded Social Security
Government Debt in the Overlapping Generations Model
The Lessons of the Overlapping-Generations Model
Suggested Readings
14. Money and Economic Growth
Monetary Systems
The Gold Standard
Production with Gold
Capitalist Consumption with Gold
Steady State Growth
Unbalanced Technical Change
The Evolution of Credit Money
Suggested Readings
15. Approaches to Technical Change
The Origin of Technical Change
The Technical Progress Function and
the Embodiment Hypothesis
The Vintage Structure of Machines
Steady State Growth in the Vintage Model
Induced Technical Change
Specialization and Imperfect Competition
Endogenous Growth with Specialization
Cumulative Causation
Suggested Readings
16. Endogenous Technical Change
Technical Change in a Capitalist Economy
Learning by Doing
R&D Investment in Technical Change
How Much R&D?
Steady-State Growth with No Persistent Effects of R&D
Steady-State Growth with Persistent Effects of R&D
Persistent Effects of R&D with a Conventional Wage Share
Suggested Readings
References
Answers to Problems
Index
Duncan K. Foley is Leo Model Professor at the New School for Social Research.
Thomas R. Michl is Professor of Economics at Colgate University.
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