Was Harrod Right?

CHOPE Working Paper No. 2012-01

36 Pages Posted: 8 Feb 2012 Last revised: 10 Feb 2012

See all articles by Kevin D. Hoover

Kevin D. Hoover

Duke University - Departments of Economics and Philosophy

Date Written: May 27, 2008

Abstract

Modern growth theory derives mostly from Robert Solow’s “A Contribution to the Theory of Economic Growth” (1956). Solow’s own interpretation locates the origins of his “Contribution” in his view that the growth model of Roy Harrod implied a tendency toward progressive collapse of the economy. He formulates his view in terms of Harrod invoking a fixed-coefficients production function. This paper, first, challenges Solow’s reading of Harrod, arguing that Harrod’s object in providing a “dynamic” theory had little to do with the problem of long-run growth as Solow understood it, but instead addressed the medium run fluctuations. It was an attempt to isolate conditions under which the economy might tend to run below potential. In making this argument, Harrod does not appeal to a fixed-coefficients production function – or to any production function at all, as that term is understood by Solow. The paper next traces the history of the dominance of Solow’s interpretation among growth economists. These tasks belong to the history of economics. The paper’s final task belongs to economic history. It offers an informal reexamination of economic history through the lens of Harrod’s dynamic model, asking whether there is a prima facie case in favor of Harrod’s model properly understood.

Keywords: economic growth, Roy Harrod, Robert Solow, dynamics, dynamic instability, knife-edge, warranted rate of growth, natural rate of growth

JEL Classification: B22, O4, E12, E13, N1, B31

Suggested Citation

Hoover, Kevin D., Was Harrod Right? (May 27, 2008). CHOPE Working Paper No. 2012-01. Available at SSRN: https://ssrn.com/abstract=2001452 or http://dx.doi.org/10.2139/ssrn.2001452

Kevin D. Hoover (Contact Author)

Duke University - Departments of Economics and Philosophy ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

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