Abstract
The problem of economic growth was a major preoccupation of Joan Robinson. She was a major contributor to the post-Keynesian theory of economic growth that followed the publication of Harrod’s seminal dynamic model. She wrote extensively and critically on the foundations of neoclassical growth theory; her concern for logically sound argument lay behind her extensive writings questioning the validity of an aggregate capital concept and the corresponding notion of an aggregate production function. Her critique of neoclassical theory placed her at the forefront of the still raging ‘Cambridge controversy’ in capital theory. Joan Robinson’s work on capital and growth also showed a real concern that economic dynamics be studied as a process in real time. The dynamics of the stationary state might be a useful starting point, but the more serious concerns were the relationship between the short- and long-run periods in the process of accumulation and growth. She also stressed the importance of understanding the evolution of economies outside equilibrium positions.
Analysis of current problems cannot wait until models … have been properly worked out, the appropriate mixture selected and the interaction between them properly diagnosed. More rough-and-ready methods have to be used. All the same, simplified models can perhaps help towards an understanding of the nature of real problems, provided that their own nature is properly understood. They can certainly hinder when not properly understood. (Joan Robinson, Essays in the Theory of Economic Growth,1968)
Robert Becker acknowledges the partial support of NSF Grant SES 85–20180. Mukul Majumdar acknowledges the partial support of NSF Grant SES 86–05503. Discussions with John H. Boyd III were helpful during the writing of this article. We thank Marilyn Neff for research assistance in the preparation of the paper.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Similar content being viewed by others
References
Aiyagari, S. R. (1985) ‘Observational Equivalence of the Overlapping Generations and the Discounted Dynamic Programming Frameworks for One-Sector Growth’. Journal of Economic Theory, 35 (April): 201–221.
Arrow, K. J. (1964) ‘Optimal Capital Policy, the Cost of Capital, and Myopic Decision Rules’. Annals of the Institute of Mathematical Statistics, 16: 21–30.
Aubin, J. P. (1977) Applied Abstract Analysis (New York: Wiley).
Barro, R. J. (1974) ‘Are Government Bonds Net Wealth?’, Journal of Political Economy, 82 (November-December): 1095–1117.
Beals, R. and T. C. Koopmans (1969) ‘Maximizing Stationary Utility in a Constant Technology’, SIAM Journal of Applied Mathematics, 17: 1001–15.
Becker, R. A. (1980) ‘On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households’, Quarterly Journal of Economics, 47 (September): 375–82.
Becker, R. A. (1981) ‘The Duality of a Dynamic Model of Equilibrium and an Optimal Growth Model: The Heterogeneous Capital Goods Case’, Quarterly Journal of Economics, 48 (May): 271–300.
Becker, R. A. (1982) ‘The Equivalence of a Fisher Competitive Equilibrium and a Perfect Foresight Competitive Equilibrium in a Multi-Sectoral Model of Capital Accumulation’. International Economic Review, 23 (February): 19–34.
Becker, R. A. (1983a) ‘Comparative Dynamics in the One-Sector Optimal Growth Model’, Journal of Economic Dynamics and Control, 6: 99–107.
Becker, R. A. (1983b) ‘A Simple Dynamic Equilibrium Model With Adjustment Costs’, Journal of Economic Dynamics and Control, 6: 79–98.
Becker, R. A. (1985a) ‘Capital Income Taxation and Perfect Foresight’, Journal of Public Economics, 26: 147–67.
Becker, R. A. (1985b) ‘Comparative Dynamics in Aggregate Models of Optimal Capital Accumulation’, Quaterley Journal of Economics, 47 (September): 375–82.
Becker, R. A. and C. Foias (1987) ‘A Characterization of Ramsey Equilibrium’, Journal of Economic Theory, 41 (February): 173–84.
Becker, R. A., J. H. Boyd III and C. Foias (1986) ‘The Existence of Ramsey Equilibrium’, Discussion Paper, Indiana University.
Benhabib, J. and K. Nishimura (1985) ‘Competitive Business Cycles’, Journal of Economic Theory, 35: 284–306.
Benhabib, J., S. Jafarey and K. Nishimura (1985) ‘The Dynamics of Efficient Intertemporal Allocations with Many Agents, Recursive Preferences and Production’, Working Paper, New York University.
Benhabib, J., M. Majumdar and K. Nishimura (1986) ‘Global Equilibrium Dynamics with Stationary Preferences’, Working Paper, New York University.
Benveniste, L. M. and T. Mitra (1979) ‘Characterizing Inefficiency of Infinite-Horizon Programs in Nonsmooth Technologies’, in General Equilibrium, Growth, and Trade: Essays in Honor of Lionel McKenzie (eds) J. R. Green and J. A. Scheinkman (New York: Academic Press) pp. 199–216.
Bewley, T. (1972) ‘Existence of Equilbria in Economies with Infinitely Many Commodities’, Journal of Economic Theory, 27: 514–40.
Bewley, T. (1977) ‘The Permanent Income Hypothesis: A Theoretical Formulation’, Journal of Economic Theory, 16: 252–92.
Bewley, T. (1980) ‘The Optimum Quantity of Money’, in Models of Monetary Economics. (eds) J. H. Kareken and N. Wallace (Minneapolis: Federal Reserve Bank of Minneapoli).
Bewley, T. (1982) ‘An Integration of Equilibrium Theory and Turnpike Theory’, Journal of Mathematical Economics, 10: 233–67.
Bewley, T. (1986) ‘Dynamic Implications of the Budget Constraint’, in Models of Economic Dynamics (ed.) H. Sonnenschein (Berlin: Springer-Verlag) pp. 117–23.
Bliss, C. J. (1975) Capital Theory and the Distribution of Income (Amsterdam: North-Holland).
Boldrin, M. (1986) ‘Paths of Optimal Accumulation in Two-Sector Models’, Working Paper, University of Rochester.
Boldrin, M. and L. Montrucchio (1987) ‘On the Inderterminancy of Capital Accumulation Paths’, in Nonlinear Economic Dynamics (ed.) J. M. Grandmont (New York: Academic Press) pp. 26–39.
Bose, A. (1974) ‘Pareto-Optimality and Efficient Capital Accumulation’, Discussion Paper, University of Rochester.
Boyd, J. H., III (1986a) ‘Recursive Utility and the Ramsey Problem’, Working Paper, University of Rochester.
Boyd, J. H., III (1986b) ‘Symmetries, Equilibria and the Value Function’, Working Paper, University of Rochester.
Boyd, J. H., III (1986c) Preferences, Technology and Dynamic Equilibria, Ph.D. Dissertation, Indiana University.
Boyer, M. (1975) ‘An Optimal Growth Model With Stationary Non-Additive Utilities’, Canadian Journal of Economics, 8 (May): 216–37.
Brock, W. A. and D. Gale (1969) ‘Optimal Growth Under Factor Augmenting Progress’, Journal of Economic Theory, 1: 229–43.
Brock, W. A. and M. Majumdar (1985) ‘On Characterizing Optimality of Competitive Programs in Terms of Decentralizable Conditions’, Cornell University Working Paper No. 335 (to appear in Journal of Economic Theory).
Brown, D. J. and L. M. Lewis (1981) ‘Myopic Economic Agents’, Econometrica, 49: 359–68.
Burmeister, E. (1980) Capital Theory and Dynamics (New York: Cambridge University Press).
Burmeister, E. and S. Turnovsky (1972) ‘Capital Deepening Response in an Economy with Heterogeneous Capital Goods’, American Economic Review, 62: 842–53.
Cass, D. (1972) ‘On Capital Overaccumulation in the Aggregative Neo-classical Model of Economic Growth: A Complete Characterization’, Journal of Economic Theory, 4: 200–23.
Cass, D. and M. Majumdar (1979) ‘Efficient Intertemporal Allocation, Consumption-Value Maximization, and Capital-Value Transversality: A Unified View’, in General Equilibrium, Growth, and Trade: Essays in Honor of Lionel McKenzie (eds) J. R. Green and J. A. Scheinkman (New York: Academic Press).
Chang, F. R. (1986) ‘Inverse Optimal Problems: A Dynamic Approach’, Working Paper, Indiana University (to appear in Econometrica).
Chichilnisky, G. and P. J. Kalman (1980) ‘Application of Functional Analysis to Models of Efficient Allocation of Economic Resources’, Journal of Optimization Theory and Applications, 30: 19–32.
Clarida, R. H. (1985) ‘Consumption, Liquidity Constraints, and Asset Accumulation in the Presence of Random Income Fluctuations’, Cowles Foundation Discussion Paper # 705R, Yale University.
Coles, J. L. (1985) ‘Equilibrium Turnpike Theory with Constant Returns to Scale and Possibly Heterogeneous Discount Factors’, International Economic Review, 26: 671–9.
Dasgupta, S. and T. Mitra (1986a) ‘Intertemporal Optimality in a Closed Linear Model of Production’, (to appear in Journal of Economic Theory).
Dasgupta, S. and T. Mitra (1986b) Intertemporal Optimality in a Multi Sector Model when Future Utilities are Discounted’, (to appear in Journal of Economic Theory).
Dechert, W. D. and K. Nishimura (1980) ‘Existence of Optimal Paths and the Turnpike Property: The Non-convex Case with Unbounded Stocks’, Working Paper, SUNY-Buffalo.
Dechert, W. D. and K. Nishimura (1983) ‘A Complete Characterization of Optimal Growth Paths in an Aggregrated Model with a Non-Concave Production Function’, Journal of Economic Theory, 31: 332–54.
Deneckere, R. and S. Pelikan (1987) ‘Competitive Chaos’, in Nonlinear Economic Dynamics (ed.) J. M. Grandmont (New York: Academic Press), pp. 26–39.
Diamond, P. A. (1965a) ‘National Debt in a Neoclassical Growth Model’, American Economic Review, 55: 1126–50.
Diamond, P. A. (1965b) ‘The Evaluation of Infinite Utility Streams’, Econometrica, 33: 170–7.
Epstein, L. G. (1983) ‘Stationary Cardinal Utility and Optimal Growth Under Uncertainty’, Journal of Economic Theory, 31: 133–52.
Epstein, L. G. (1986) ‘Implicitly Additive Utility and the Nature of Optimal Economic Growth’, Journal of Mathematical Economics, 15: 111–28.
Epstein, L. G. (1987a) ‘A Simple Dynamic General Equilibrium Model’, Journal of Economic Theory, 41 (February): 68–95.
Epstein, L. G. (1987b) ‘The Global Stability of Efficient Intertemporal Allocations’, Econometrica, 55 (March): 329–57.
Epstein, L. G. and J. A. Hynes (1983) ‘The Rate of Time Preference and Dynamic Economic Analysis’, Journal of Political Economy, 91: 611–35.
Fisher, I. (1907) The Rate of Interest (New York: Macmillan).
Gale, D. (1967) ‘On Optimal Development in a Multi-Sector Economy’, Review of Economic Studies, 34: 1–18.
Goldman, S. (1968) ‘Optimal Growth and Continual Planning Revision’, Review of Economic Studies, 35 (April): 145–54.
Gray, J. A. and S. Salant (1983) ‘Transversality Conditions in Infinite-Horizon Models’, Working Paper, Washington State University.
Hahn, F. (1966) ‘Equilibrium Dynamics with Heterogeneous Capital Goods’, Quarterly Journal of Economics, 80: 633–46.
Hahn, F. (1987) Money, Growth and Stability (Cambridge, Mass.: MIT Press).
Harcourt, G. (1972) Some Cambridge Controveries in the Theory of Capital (Cambridge: Cambridge University Press).
Hicks, J. (1946) Value and Capital (Oxford: Oxford University Press).
Hieber, G. (1981) On Optimal Paths with Variable Technology (Cambridge, Mass: Oelgeschlager, Gunn and Hain).
Hurwicz, L. (1986) ‘On Informational Decentralization and Efficiency in Resource Allocation Mechanisms’, in Studies in Mathematical Economics (ed.) S. Reiter. (The Mathematical Association of America), pp. 238–350.
Hurwicz, L. (1986) ‘On Informational Decentralization and Efficiency in Resource Allocation Mechanisms’, in Studies in Mathematical Economics (ed.) S. Reiter. The Mathematical Association of America, pp. 238–350.
Iwai, K. (1972) ‘Optimal Economic Growth and Stationary Ordinal Utility — A Fisherian Approach’, Journal of Economic Theory, 5: 121–51.
Koopmans, T. C. (1958) Three Essays on the State of Economic Science (New York: McGraw-Hill).
Koopmans, T. C. (1960) ‘Stationary Ordinal Utility and Impatience’, Econometrica, 28: 287–309.
Koopmans, T. C. (1967) ‘Objectives, Constraints, and Outcomes in Optimal Growth Models’, Econometrica, 35: 1–15.
Koopmans T. C. (1972) ‘Representation of Preference Orderings Over Time’, in Decision and Organization (eds) C. B. McGuire and R. Radner (Amsterdam: North-Holland).
Koopmans, T. C., P. A. Diamond and R. E. Williamson (1964) ‘Stationary Utility and Time Perspective’, Econometrica, 32: 82–100.
Kurz, M. L. (1968) ‘The General Instability of a Class of Competitive Growth Processes’, Review of Economic Studies, 35: 155–74.
Kurz, M. L. (1969) ‘On the Inverse Optimum Problem’, in Mathematical Systems Theory and Economics (eds) H. W. Kuhn and G. P. Szego (Berlin: Springer-Verlag).
Levhari, D., L. J. Mirman and I. Zilcha (1980) ‘Capital Accumulation Under Uncertainty’, International Economic Review, 21: 661–71.
Leviatan, N. (1970) ‘A Diagrammatic Exposition of Optimal Growth’, American Economic Review, 60: 302–9.
Lucas, R. E., Jr. and E. Prescott (1971) ‘Investment Under Uncertainty’, Econometrica, 39: 658–82.
Lucas, R. E., Jr. and N. L. Stokey (1984) ‘Optimal Growth with Many Consumers’, Journal of Economic Theory, 32: 139–71.
Magill, M. (1981) ‘Infinite Horizon Programs’, Econometrica, 49: 679–711.
Magill, M. and K. Nishimura (1984) ‘Impatience and Accumulation’, Journal of Mathematical Analysis and Applications, 98: 270–81.
Majumdar, M. (1970) ‘Some Approximation Theorems on Efficiency Prices for Infinite Programs’, Journal of Economic Theory, 2: 399–410.
Majumdar, M. (1972) ‘Some General Theorems on Efficiency Prices with an Infinite Dimensional Commodity Space’, Journal of Economic Theory, 5: 1–13.
Majumdar, M. (1974) ‘Efficient Programs in Infinite Dimensional Spaces: A Complete Characterization’, Journal of Economic Theory, 7 (April): 335–69.
Majumdar, M. (1975) ‘Some Remarks on Optimal Growth with Intertemporally Dependent Preferences in the Neoclassical Model’, Review of Economic Studies, 42: 147–53.
Majumdar, M. (1984) ‘Some Recent Developments in the Theory of Intertemporal Allocation’, Discussion Paper, Cornell University.
Majumdar, M. (1986) ‘Decentralization in Dynamic Economic Models’, (mimeo) Cornell University.
Majumdar, M. and M. Kurz (1972) ‘Efficiency Prices in an Infinite Dimensional Space: A Synthesis’, Review of Economic Studies, 39: 147–58.
Majumdar, M. and T. Mitra (1982) Intertemporal Allocation with a Non-Convex Technology: The Aggregative Framework’, Journal of Economic Theory, 27: 101–36.
Malinvaud, E. (1953) ‘Capital Accumulation and Efficient Allocation of Resources’, Econometrica, 21: 233–68.
McFadden, D. (1975) ‘An Example of the Non-Existence of Malinvaud Prices in a Tight Economy’, Journal of Mathematical Economics, 2 (March): 17–19.
McKenzie, L. W. (1986) ‘Optimal Economic Growth, Turnpike Theorems and Comparative Dynamics’, in Handbook of Mathematical Economics, Vol. 3, (eds) K. J. Arrow and M. Intriligator (Amsterdam: North-Holland) pp. 1281–355.
Mitra, T. (1979a) ‘Identifying Inefficiency in Smooth Aggregative Models of Economic Growth’, Journal of Mathematical Economics, 6: 85–111.
Mitra, T. (1979b) ‘On the Value Maximizing Property of Infinite Horizon Efficient Programs’, International Economic Review, 20 (October): 635–42.
Nyarko, Y. (1986) ‘On Characterization Optimality of Stochastic Competition Processes’, (to appear in Journal of Economic Theory).
Pazner, E. A. and A. Razin (1980) ‘Competitive Efficiency in an Overlapping-Generation Model with Endogenous Population’, Journal of Public Economics, 13: 249–58.
Peleg, B. and M. E. Yaari (1970) ‘Efficiency Prices in an Infinite-Dimensional Space’, Journal of Economic Theory, 2: 41–85.
Phelps, E. S. (1966) Golden Rules of Economic Growth (New York: Norton).
Rader, T. (1971) The Economics of Feudalism (New York: Gordon & Breach).
Radner, R. (1967) ‘Efficiency Prices for Infinite Horizon Production Programs’, Review of Economic Studies, 34: 51–66.
Ramsey, F. P. (1928) ‘A Mathematical Theory of Saving’, Economic Journal, 38: 543–59.
Robertson, A. P. and W. Robertson (1973) Topological Vector Spaces (Cambridge: Cambridge University Press).
Robinson, J. (1952) The Rate of Interest and Other Essays (London: Macmillan).
Robinson, J. (1956) The Accumulation of Capital (London: Macmillan)
Robinson, J. (1960) Collected Economic Papers: Volume Three (Oxford: Blackwell).
Robinson, J. (1968) Essays in the Theory of Economic Growth (London: Macmillan).
Robinson, J. (1973) Collected Economic Papers: Volume Four (Oxford: Blackwell).
Romer, P. (1986) ‘Increasing Returns and Long-Run Growth’, Journal of Political Economy, 94 (October): 1002–37.
Ross, S. M. (1983) Introduction to Stochastic Dynamic Programming (New York: Academic Press).
Samuelson, P. A. (1947) Foundations of Economic Analysis (Cambridge, Mass.: Harvard University Press).
Sargent, T. J. (1987) Dynamic Macroeconomic Theory (Cambridge,. Mass.: Harvard University Press).
Schechtman, J. (1976) ‘An Income Fluctuation Problem’, Journal of Economic Theory, 12: 218–41.
Schechtman, J. and V. L. S. Escudero (1977) ‘Some Results on “An Income Fluctuation Problem”,’ Journal of Economic Theory, 16: 151–66.
Scheinkman, J. A. (1978) ‘Stability of Separable Hamiltonians and Investment Theory’, Review of Economic Studies, 45: 559–70.
Scheinkman, J. A. and L. Weiss (1986) ‘Borrowing Constraints and Aggregate Economic Activity’, Econometrica, 54: 23–45.
Shell, K. (1971) ‘Notes on the Economics of Infinity’, Journal of Political Economy, 79: 1002–11.
Sotomayer, M. D. (1984) ‘On Income Fluctuations and Capital Gains’, Journal of Economic Theory, 32: 14–35.
Spulber, N. and R. A. Becker (1986) ‘Theoretical Issues in Optimal Planning’, International Journal of Development Planning Literature, 1: 237–53.
Streufert, P. (1985) ‘Dynamic Allocation with Consistent Intergenerational Benevolence’, IMSSS Technical Report # 471, Stanford.
Usher, D. (ed.) (1980) The Measurement of Capital (Chicago: University of Chicago Press).
Uzawa, H. (1968) ‘Time Preference, the Consumption Function, and Optimum Asset Holdings’, in Value, Capital and Growth: Papers in Honour of Sir John Hicks (ed.) James N. Wolfe (Edinburgh: Edinburgh University Press).
Waldman, K. H. (1985) ‘On Bounds for Dynamic Programs’, Mathematics of Operations Research, 10: 220–32.
Wessels, J. (1977) ‘Markov Programming by Successive Approximations with Respect to Weighted Supremum Norms’, Journal of Mathematical Analysis and Applications, 58: 326–35.
Young, A. A. (1928) ‘Increasing Returns and Economic Progress’, Economic Journal, 38: 527–42.
Editor information
Editors and Affiliations
Copyright information
© 1989 George R. Feiwel
About this chapter
Cite this chapter
Becker, R.A., Majumdar, M. (1989). Optimality and Decentralization in Infinite Horizon Economies. In: Feiwel, G.R. (eds) Joan Robinson and Modern Economic Theory. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-08633-7_16
Download citation
DOI: https://doi.org/10.1007/978-1-349-08633-7_16
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-08635-1
Online ISBN: 978-1-349-08633-7
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)