Growth and Distribution

Growth and Distribution is the first text designed to support a comprehensive advanced undergraduate or graduate course on the theory, measurement, and history of economic growth. The book, which presents Classical and Keynesian in parallel with Neoclassical approaches to growth theory, introduces students to advanced tools of intertemporal economic analysis through carefully developed treatments of land- and resource-limited growth, and covers money and growth, the impact of government debt and social security systems on growth, and theories of endogenous growth and endogenous technical change. The models emphasize rigorous reasoning from basic economic principles and insights without excessive formal complication, and respond to students' interest in the history and policy dilemmas of real-world economies. Surveys of data and discussion of empirical controversies are closely integrated with the development of theoretical tools. The book includes access to a comprehensive data set extending the Penn World Tables in a form suitable for exploration in hands-on student projects. In addition to carefully worked examples showing how to use the analytical techniques presented, the book contains many problems suitable for inclusion in problem sets and examinations. Detailed answers to these problems are also provided.

Table of Contents:
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

About the Author :
Duncan K. Foley is Leo Model Professor of Economics at The New School for Social Research. Thomas R. Michl is Professor of Economics at Colgate University.

Review :
After years of preoccupation with inflation and unemployment, macroeconomists have turned their attention to growth...But students who wish to learn more about this important subject have few options: undergraduate macro texts usually devote no more than a chapter to growth, while journal articles and graduate texts (with their differential equations and Hamiltonians) are well beyond the reach of most students...Foley and Michl have filled this lacuna. A major feature of the volume is its coverage of alternative approaches to growth and distribution. This distinguishes it from standard macro texts...which deal only with neoclassical models...It should appeal to students who find theoretical models dry and irrelevant unless they can be readily applied to real economies...The volume provides a masterful and authoritative presentation of growth and distribution approaches. The elegant, formal presentation of models is nicely complemented with empirical applications and precise verbal discussion of the underlying issues involved. -- Amitava Krishna Dutt Eastern Economic Journal