Joan Robinson's growth model
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Joan Robinson, in her book The Accumulation of Capital[1] published in 1956, propagated a simple growth model, which reflects the working of a pure capitalist economy, also known as "Joan Robinson's Growth Model". However, the Accumulation of Capital was a terse book and in one of her other books entitled Essays in the theory of Economic Growth,[2][3] she tried to lower the degree of abstraction. The growth model was propagated in verbal terms, where later on the mathematical formalization was put forward by Kenneth K. Kurihara.
Assumptions:[4]
- There is a laissez-faire closed economy.
- The factors of production are capital and labour only.
- There is neutral technical progress.
- There are only two classes: workers and capitalists, among whom the national income is distributed.
- Workers save nothing and spend their wage income on consumption.
- Capitalists consume nothing, but save and invest their entire income for capital formation.
- There is no change in the price level.
- Saving is a function of profit.
The model
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The entrepreneurs’ total profit and the workers’ total wage bill constitute the net national income. It can be mathematically expressed as
- pY=wN+πpK
where Y is the net national income, w is the money wage rate, N is the number of workers employed, K is the amount of capital utilized, p is the average price of output as well as of capital and π is the gross profit rate.
References
- ^ Joan Robinson, The Accumulation of Capital (London: Macmillan & Co. Ltd., 1956)
- ^ Joan Robinson, Essays in the Theory of Economic Growth (London: Macmillan & Co. Ltd., 1963)
- ^ Hamberg, D. (1963). "Essays in the Theory of Economic Growth by Joan Robinson". American Economic Review. 53 (5): 1109–1114.
- ^ Mishra, S. K.; Puri, V. K. Economics of Development and Planning. ISBN 978-81-8488-829-4.
Further reading
- Original sources
https://www.jstor.org/stable/40400250
- Joan (1956) The Accumulation of Capital London: Macmillan & Co. Ltd.
- Robinson, Joan (1963) Essays in the Theory of Economic Growth London: Macmillan & Co. Ltd. 1963)
- Additional sources
- Cuyvers, Ludo (1979). "Joan Robinson's Theory of Economic Growth". Science and Society. 43 (3): 326–348. JSTOR 40402186.
- Gandolfo, G. (1967). "Some critical remarks on Joan Robinson's growth model". Rivista di Politica Economica. 57.
- Tobin, James (1989). "Growth and Distribution: A Neoclassical Kaldor–Robinson Exercise". Cambridge Journal of Economics. 13 (1). Oxford University Press: 37–45. JSTOR 23598147.