Nicholas Kaldor
Nicholas Kaldor, Baron Kaldor (12 May 1908 – 30 September 1986), born Káldor Miklós, was a Cambridge economist in the post-war period. He developed the "compensation" criteria called Kaldor–Hicks efficiency for welfare comparisons (1939), ...
in his essay titled A Model of Economic Growth, originally published in Economic Journal in 1957, postulates a growth model, which follows the Harrodian dynamic approach and the Keynesian techniques of analysis. In his growth model, Kaldor attempts “to provide a framework for relating the genesis of technical progress to
capital accumulation
Capital accumulation is the dynamic that motivates the pursuit of profit, involving the investment of money or any financial asset with the goal of increasing the initial monetary value of said asset as a financial return whether in the fo ...
”, whereas the other neoclassical models treat the causation of technical progress as completely exogenous.
[ Nancy J. Wulwick (1992). Kaldor's Growth Theory. Journal of the History of Economic Thought, 14, pp 36-54 ]
According to Kaldor, “''The purpose of a theory of economic growth is to show the nature of non-economic variables which ultimately determine the rate at which the general level of production of the economy is growing, and thereby contribute to an understanding of the question of why some societies grow so much faster than others.''”
[Nicholas Kaldor: ''A Model of Economic Growth'', Economic Journal, 1957.][ Nancy J. Wulwick (1992). Kaldor's Growth Theory. Journal of the History of Economic Thought, 14, pp 36-54 ]
Assumptions
The basic properties of Kaldor's growth model are as follows:
# ''Short period supply of aggregate goods and services in a growing economy is inelastic and not affected by any increase in effective monetary demand. As it is based on the Keynesian assumption of “full employment”.''
# ''The technical progress depends on the rate of capital accumulation.'' Kaldor postulates the “technical progress function”, which shows a relationship between the growth of capital and productivity, incorporating the influence of both the factors. Where the capital-output ratio will depend upon the relationship of the growth of capital and the growth of productivity.
# ''Wages and profits constitute the income'', where wages comprise salaries and earnings of manual labor, and profits comprise incomes of entrepreneurs as well as property owners. And total savings consist of savings out of wages and savings out of profit.
# ''General price level is constant.
See also
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Kaldor's facts
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Kaldor's growth laws
Kaldor's growth laws are a series of three ''laws'' relating to the causation of economic growth.
Looking at the countries of the world now and through time Nicholas Kaldor noted a high correlation between living standards and the share of resour ...
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Keynesian economics
Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output ...
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Neoclassical economics
Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...
References
Additional sources
* Tobin, James, (1989) "Growth and Distribution: A Neoclassical Kaldor-Robinson Exercise," Cambridge Journal of Economics, Oxford University Press, vol. 13(1), pages 37-45, March.
Economic growth
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