Core macroeconomic theory was taught in a sequence of four half-semester courses at M.I.T. In this post we have material from the final course of the sequence (typically taken in the fall term of the second year of residency) that was dedicated to growth and capital theory and taught by Robert Solow in 1973.
The course syllabus and final examination for the third course in the sequence on Macroeconometric Models taught by Franco Modigliani were transcribed for the previous post.
Economics in the Rear-view Mirror thanks Juan C. A. Acosta who copied the course syllabus and final examination that are found in the Franco Modigliani Papers (Box T7) at the Duke University Economists’ Papers Project and has graciously shared them for transcription here.
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14.454
MACRO THEORY IV
Fall 1973 2nd half
- Growth Theory
background, if necessary: Solow, GROWTH THEORY, Ch. 1,2
Burmeister and Dobell: MATHEMATICAL THEORIES OF ECONOMIC GROWTH, Ch. 1-4
and/or
Wan: ECONOMIC GROWTH, Ch. 1, 2, 4 (sec. 3)
Kahn: “Exercise in the Analysis of Growth,” OXFORD ECONOMIC PAPERS, New Series, Vol. 11, 1959, pp. 143-156 (reprinted in GROWTH ECONOMICS, ed. A. K. Sen, Penguin)
Wan: Ch. 4, sec. 4
- Optimal Growth
background, if necessary: Solow, GROWTH THEORY, Ch. 5
Burmeister and Dobell: Ch. 11
and/or
Wan: Ch. 9, 10
Koopmans: “Objectives, Constraints and Outcomes in Optimal Growth Models” ECONOMETRICA, Vol. 35, 1967, pp. 1-15 (reprinted in Koopmans, SCIENTIFIC PAPERS, pp. 548-560)
- Capital Theory
Malinvaud: LECTURES ON MICROECONOMIC THEORY, Ch. 10
Hirschleifer: INVESTMENT, INTEREST AND CAPITAL, Ch. 2, 3, 4, 6
Dougherty: “On the Rate of Return and the Rate of Profit” ECONOMIC JOURNAL, December 1972, pp. 1324-1349
Burmeister and Dobell: Ch. 8, 9
Weizsäcker: STEADY-STATE CAPITAL THEORY, pp. 1-22, 32-47, and passim
Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Robert M. Solow, Box 68. Also in Franco Modigliani Papers, Box T7.
14.454 FINAL EXAM
19 Dec 1973
R. M. Solow
ANSWER TWO QUESTIONS, total time 1 ½ hours
- Suppose an economy with effectively unlimited supply of labor in the sense that any amount of labor is available (from an agricultural pools, say) at an institutionally determined real wage
. In other respects the economy is like the standard one-sector model.
- Analyze the growth of such an economy if saving and investment are proportional to output. What might correspond to the “full employment, full utilization” assumption?
- What if saving and investment are proportional to profits?
- How does a once-for-all change in
- Sketch an analysis of an optimal-capital-accumulation problem in which the criterion function values the capital stock (per worker) as well as consumption, for prestige or power reasons, say, so that instantaneous utility is written u(c,k). In particular, is it true, as we would expect, that such a society should save more than it would if it valued consumption only?
- Criticize the “neoclassical” theory of growth and capital; but do not be vague – where you have a complaint you should be prepared to suggest a better way.
Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Franco Modigliani Papers, Box T7.
Image Source: Robert Solow pictures at the MIT Museum Website.