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Neoclassical Growth Theory

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The New Palgrave Dictionary of Economics

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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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  1. http://link.springer.com/referencework/10.1057/978-1-349-95189-5

    F. H. Hahn

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  1. F. H. Hahn
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Hahn, F.H. (2018). Neoclassical Growth Theory. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_704

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