Harrod and Domar on dynamic economics
DOI:
https://doi.org/10.13133/2037-3643/10814Keywords:
Harrod, Domar, theory of growth, dynamic economicsAbstract
Although Harrod and Domar developed their theories of growth independently, most economists became aware of them at roughly the same time. Both authors broke out of the static framework of Keynes’ General Theory by recognising the productive-capacity creating, as well as the aggregate-demand creating, effects of investment. Their equilibrium rates of growth appeared to be the same and thus the two approaches were joined in textbooks and in numerous articles and the Harrod-Domar model. Despite their similarities, however, there were significant differences in their approaches to dynamic economics and the theory of growth. The present paper offers a comparison of these theories to help better understand the strengths and weaknesses of both.
JEL: B22, O40
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