Solow's Struggle with Medium-Run Macro-Economics: 1956-1995

Abstract

Solow has repeatedly called for the development of models that combine equilibrium and out-of equilibrium outcomes or what he called a macro-economics of the medium-run. This paper recounts the history of Solow’s different attempts to address this issue. It starts in early 1950s when Solow developed his long-run growth model and it ends in the mid 1990s with the publication of 'A Critical Essay on Modern Macro-Economic Theory' co-written with Frank Hahn. This narrative involves different economists associated with various research traditions, going from the neo-classical synthesis in the 1960s, the New Classical Economics in the 1970s and the New Keynesianism in the 1980s.

Keywords: economic growth, Robert Solow, medium-run macro-economics, dynamics, multiple equilibria

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