Uzawas theorem

Running Head : UZAWA 'S GROWTH THEORY

Uzawa 's Growth Theory and the Neoclassical Growth Model

[Name]

[Affiliation]

Solow growth theory represent the relationship between technological change and growth where as the return falls , firms shift to more capital intensive production methods causing the investment to increase ADDIN EN .CITE 2Solow Economic Growth200814 May2008The Professor Networkhttp /www .economyprofessor com /economictheories /solow-economic-growth .php (2008 . In to achieve a model for describing the long-run evolution of the economy , this model ignores other important aspects of macroeconomics such as short-run

rise and falls in employment and savings rates . Robert Solow developed this model in the 1950s and wrote A Contribution to the Theory of Economic Growth which provides a simple but dynamic model for a more advanced macroeconomic theory ADDIN EN .CITE Schlicht7Ekkehart SchlichtA Variant of Uzawa apos s TheoremEconomic BulletinEconomic Bulletin1-3200628 February 2006http /economics bulletin .vanderbilt .edu /2006 /volume5 /EB-06E10001A .pdf15 May 2008 (Schlicht 2006 . However Hirofumi Uzawa introduced another economic model in the 1960s called the Uzawa Two-Sector Growth Model where this model is always stable given that the `consumption-goods sector is more capital-intensive than the investment-goods sector . This is qualitatively different from the Solow economic growth theory since its stability property solely depends on the causal property of technology ADDIN EN .CITE Fonsesca33312Goncalo L . FonsescaThe Uzama Two-Sector Growth Model200818 MayEconomics New Schoolhttp /cepa .newschool .edu /het /essays /growth /multisector /uzawagr1 .htm (Fonsesca

In 1956 , Robert M . Solow and Trevor Swan proposed an economic growth model claiming that the capital-output ratio should not be regarded as exogenous as what the Harrod-Domar growth model stated . They introduced the Solow-Swan ' model known also as the Neoclassical ' growth model where the capital-output ratio (v ) will be the adjusting variable to make s /v and the natural rate of growth (n ) equal . However , various economists have also proposed similar theory to the Solow-Swan model such as Jan Tinbergen in 1942 , James Tobin in 1955 , and Harold Pilvin in 1953 . Tinbergen presented empirical estimates of the relevant coefficients in his model as effective as the Solow-Swan . Pilvin , on the other hand , had made an earlier argument regarding the Harrodian knife-edge ' problem . He argued that it can be resolved through the introduction of a flexible capital-output ratio , but he did not raise the issue of a steady-state . Tobin , just like Pilvin , he did not dwell into the concept of stability of the steady-state but the growth model that he introduced was similar to the Solow-Swan in the concept of money . Tobin 's model then became the predecessor of theories on monetary growth ADDIN EN .CITE Fonseca44412Goncalo L . FonsecaThe Neoclassical Growth Model200818 MayEconomics New Schoolhttp /cepa .newschool .edu /het /essays /growth /neoclass /solowgr .htm (Fonseca

In 1961 , Hirofumi Uzawa introduced a two-sector extension of the Solow-Swan growth model which also encouraged a number of studies in the 1960s such as the Review of Economic Studies ADDIN EN .CITE Fonseca33312Goncalo L . FonsecaThe Uzama Two-Sector Growth Model200818 MayEconomics New Schoolhttp /cepa .newschool .edu /het /essays /growth /multisector /uzawagr1 .htm (Fonseca...