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Theory of Economic Growth$
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Michio Morishima

Print publication date: 1969

Print ISBN-13: 9780198281641

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198281641.001.0001

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A Neo‐Classical Passage to Growth Equilibrium

A Neo‐Classical Passage to Growth Equilibrium

(p.44) III A Neo‐Classical Passage to Growth Equilibrium
Theory of Economic Growth

Michio Morishima

Oxford University Press

Investigates whether a series of the short‐run equilibria starting from an arbitrarily (or historically) given capital–labour endowment will eventually approach the state of the long‐run or ‘Silvery Equilibrium’. Taking a neoclassical approach to growth equilibrium, it is found that once a more general model of flexible population growth is used, the Silvery Equilibrium may be unstable even though the relative capital‐intensity condition is satisfied. Also, the stability depends not only upon the capital intensities of the two industries but also upon the relative steepness of the warranted‐rate‐of‐growth and the natural‐rate‐of‐growth curve and the flexibility of workers’ and capitalists’ consumption–savings decisions.

Keywords:   capital intensity, consumption, economic growth, growth equilibrium, instability, long‐run equilibrium, natural rate of growth, neoclassical economics, relative capital intensity, savings, short‐run equilibrium, Silvery Equilibrium, stability, warranted rate of growth

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