Conversations on Growth, Stability and Trade
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Conversations on Growth, Stability and Trade

An Historical Perspective

Brian Snowdon

This unique volume provides a comprehensive survey of the major economic issues that have helped shape the modern world. It includes discussions of the latest research findings in macroeconomics and scrutinises some of the most important debates in economic history. The author examines the many controversies relating to the role of government in a modern economy, long-run growth and development, the spread of the Industrial Revolution, the causes and consequences of the ‘Great Depression’, the ‘Great Peacetime Inflation’, the conduct of stabilisation policy, international economic integration and globalisation.
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Chapter 3: Growth Theories: Old and New

Brian Snowdon


Popular discussions of public policy uses the word growth indiscriminately. Politicians promise to increase the national Ôgrowth rateÕ without saying, probably without knowing, whether they mean to accelerate the recovery from a recession, or to move the economy to a higher, but parallel, steady-state track, or genuinely to add a little something to the steady-state rate of growth. Journalists evince no more understanding. (Robert Solow, 2000a) If you torture the data long enough it will confess. (Ronald Coase) 3.1 THE RENAISSANCE OF ECONOMIC GROWTH RESEARCH Following the stimulating and path-breaking contributions of Abramovitz (1986), Baumol (1986), Romer (1986) and Lucas (1988) the study of economic growth has once again become a very active research area. This reorientation of research emphasis is regarded as long overdue by many economists. Although the revival of growth research began in the mid 1980s it was not until the 1990s that the literature really exploded. Two important surveys of macroeconomics bear witness to this fact. While MankiwÕs (1990) survey makes no mention of growth whatsoever, Fischer (1988) devotes a mere four sentences to the ÔTheory of GrowthÕ and only refers to RomerÕs 1986 paper in passing. However, by 1989 Robert Barro and Paul Romer were launching a major joint research project on economic growth through Harvard University and the National Bureau of Economic Research and by 1996 the first issue of the Journal of Economic Growth was also published. Reflecting these developments, during the 1990s, many well-known textbook authors began to place their...

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