domingo, 28 de diciembre de 2014

Joan Robinson's growth model

Joan Robinson in her book The Accumulation of Capital published in 1956, propagated a simple growth model, which reflects the working of a pure capitalist economy, also known as the "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, 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:-

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 entrepreneurs among whom the national income is distributed.
Workers save nothing and spend their wage income on consumption.
Entrepreneurs consume nothing, but save and invest their entire
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