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The Strathprints institutional repository is a digital archive of University of Strathclyde's Open Access research outputs. Strathprints provides access to thousands of Open Access research papers by University of Strathclyde researchers, including by researchers from the Department of Computer & Information Sciences involved in mathematically structured programming, similarity and metric search, computer security, software systems, combinatronics and digital health.

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Solovian and new growth theory from the perspective of Allyn Young on macroeconomic increasing returns

Sandilands, R.J. (2009) Solovian and new growth theory from the perspective of Allyn Young on macroeconomic increasing returns. History of Political Economy, 41. pp. 285-303. ISSN 0018-2702

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Abstract

This paper evaluates Solow's neoclassical growth model and related empirical estimates of the sources of growth. Invoking Allyn Young, it is argued that the fundamental sources of growth cannot be measured by the value of factor inputs (including research inputs) without reference to the overall growth of product demand in the economy that both induces and limits increased specialization. What is attributed to the factors-the value of their marginal products-is not a measure of their contribution. Integration does not give the social picture. Young's theory of macroeconomic increasing returns reveals the limitations of models that assume an aggregate production function exhibiting constant returns to scale while "augmented" by exogenous technical progress. His endogenously self-sustaining growth paradigm is also shown to differ in important respects (including in its policy implications) from modern endogenous growth theory.