Hahn and Mathews: The Theory of Economic Growth: A Survey

FH Hahn and RCO Matthews, “The Theory of Economic Growth: A Survey,” Economic Journal 74, no. 296 (1964): 779-902.

Below are only a handful of quotes selected, mostly focusing on the relationship between the Harrod-Domar model of growth and neo-classical models.

"The distinctive assumptions of the Harrod-Domar model, in the schematic form in which we shall now present it, are as follows: (1) A constant proportion...of income...is devoted to savings. (2) The amounts of capital and of labour needed to produce a unit of output are both uniquely given; for the moment this may be thought of as the result of technological considerations--fixed coefficients in production...(3) The labour force grows over time at a constant rate...fixed by non-economic, demographic forces" (783).

"The requirements for steady growth in Y may be looked at from the side of the two inputs, labour and capital, in turn. They are not on a par, because capital is a produced means of production, and labour is not...Labour. Since labour requirements per unit of output are given, it is impossible for Y permanently to grow at a constant rate greater than n, the rate of growth of the labour supply...Capital. For equilibrium, the amount people plan to save must equal the amount they plan to invest" (783-4).

Neo-Classical models:

"Let us revert to Harrod-Domar as our starting-point. We restore the assumption dropped in the preceding section that employment must grow at the same rate as the labour supply in order for there to be equilibrium. What we drop is the assumption that the amount of labour and capoital required to produce a unit of output are fixed. Instead we postulate a continuous function linking output to the inputs of capital and labour. We continue to assume that there are constant returns to scale and no technical progress. The capital-output ratio is now variable" (787-8).

"It would be wrong to suppose that Harrod was unaware of the arguments on which the neo-classical model is based. His grounds for rejecting them were not that he maintained that the capital-output ratio was unalterable for technological reasons" (789-90).