Solow's Harrod: Transforming Cyclical Dynamics into a Model of Long-Run Growth
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’s
invoking a fixed-coefficients production function. We challenge Solow’s reading of
Harrod’s “Essay in Dynamic Theory,” 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 medium-run fluctuations, the “inherent instability” of economies.
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. Solow interpreted Harrod’s “Essay” in the light of a particular culture
of understanding grounded in the practice of formal modeling that emerged in economics
in the post-World War II period. The fate of Harrod’s analysis is a case study in
the difficulties in communicating across distinct interpretive communities and of
the potential for losing content and insights in the process. From Harrod’s English
Keynesian point of view, Solow’s interpretation arose out of a culture of misunderstanding,
and his objects – particularly, of trying to account for a tendency.
Type
Journal articleSubject
economic growthRoy Harrod
Robert Solow
dynamics
dynamic instability
knife-edge
warranted rate of growth
natural rate of growth
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Show full item recordScholars@Duke
Kevin Douglas Hoover
Professor of Economics
Professor Hoover's research interests include macroeconomics, monetary economics,
the history of economics, and the philosophy and methodology of empirical economics.
His recent work in economics has focused on the application of causal search methodologies
for structural vector autoregression, the history of microfoundational programs in
macroeconomics, and Roy Harrod's early work on dynamic macroeconomics. In philosophy,
he has concentrated on issues related to causality, especially in economi
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