• Table of Contents
    • Abstract
    • Keywords
    • Article
      • 1 The simple model
        • 1.1 The single good economy. no technical progress
        • 1.2 Discussion of the model
        • 1.3 The single good economy with technical progress
        • 1.4 The one sector model with embodied technical progress
      • 2 Two sector growth models
        • 2.1 Steady state
        • 2.2 Stability
        • 2.3 Technical progress
      • 3 Many sectors
    • See Also
    • Bibliography
    • How to cite this article

neoclassical growth theory

F.H. Hahn
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
Alternate versions available: 1987 Edition
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Abstract

Neoclassical growth theory is mostly that of the equilibrium of a competitive economy through time. It stresses capital accumulation, population growth and technical progress. It distinguishes momentary equilibrium (when the capital stock, the working population and technical know-how are fixed) from long-run equilibrium (when none of these elements is given). Long-run equilibrium is not a sequence of momentary equilibria, since it embodies the rational expectations of agents. The theory has little to say about the ‘animal spirits’ that may determine an economy's potential growth rate, but provides a good base camp for sallies into the study of particular economies.
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Article

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How to cite this article

Hahn, F.H. "neoclassical growth theory." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 19 September 2014 <http://www.dictionaryofeconomics.com/article?id=pde2008_N000040> doi:10.1057/9780230226203.1170

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