Closing the last section, all of the young economists that published Essays on the Theory of Optimal Economic Growth abandoned the idea and redirected their efforts in other fields; all except Shell.
Solow gave a benediction on growth theory in 1969 by comparing the theories to reconnaissance exercises. They’re meant to see what it’s like out there before you build a huge model and gather a mountain of data. But theory had no more to offer and the Italian economic journalist Arrigo Levi said, “There are no new discoveries. All the great discoveries have been made.”
For a quarter century after WWII, the U.S., Japan, and Europe all enjoyed sustained business expansion. The business cycle seemed to be tamed or even eliminated after 150 years of wide peak-and-trough behavior. Swedish authorities decided to add economics to the list of Nobel Prizes in hopes that it might bring forth more economic insight and grow the field.
A for Bob; but do you know you summarized 3 paragraphs in ... 3 paragraphs?
ReplyDeleteIt would be better to say the theory had no more to offer at that time.
Much of what we do for the remainder of the semester will be on the Solow model up to this point (the newer stuff is pretty rough to do with undergraduates).