M.I.T. Economic Growth and Fluctuations. Readings and Midterm Exam. Solow, 1966
The readings for the second term MIT graduate core course in macroeconomics “Economic Growth and Fluctuations” was taught by Robert Solow in 1966. The reading list and midterm questions transcribed for this posting come from his papers at the Duke Economists’ Papers Archive. Solow was indeed listed for this course in the internal report “Department of Economics, Teaching Responsibilities” dated March 4, 1966 in Box 3 of the Department of Economics Papers in the M.I.T. archives.
The first term course that academic year was taught by Evsey D. Domar. His 14-page reading list (!) together with the midterm and final examinations have been transcribed and posted as well.
READING LIST 14.452
I. Economic Growth
- Stylized Facts
Kendrick and Sato, “Factor Prices, Productivity and Growth”, AER, December 1963.
Bureau of the Census, Long-Term Economic Trends (This is a compendium of data. Spend an hour or two leafing through it.)
- Aggregative Models
Hahn and Matthews, “The Theory of Economic Growth: A Survey”, Economic Journal, December 1964, Parts I, II, IV.
Modigliani, “Comment” in Behavior of Income Shares (NBER), pp. 39-50.
Tobin, “Money and Economic Growth”, Econometrica, October 1965.
Marty, “The Neoclassical Theorem”, AER, December 1964.
Diamond, “National Debt in a Neoclassical Growth Model”, AER, December 1965, pp. 1126-1135 only. Rest optional.
Findlay, “The Robinsonian Model…”, Economica, February 1963 and comments by Robinson and Findlay in Economica, November 1963.
- Sources of Potential Output
Nelson, “Aggregate Production Functions” AER, September 1964
Denison, Sources of Economic Growth in the U.S. (Don’t read every word, but try to grasp content.)
Abramovitz, “Review of Denison”, AER, September 1962.
Phelps, “The New View of Investment”, QJE, November 1962.
David and van de Kliendert, “Biased Efficiency Growth in the U.S.”, AER, June 1965.
II. Short-Run Macrodynamics
- Short-Run Movements in Productivity
Brechling: “The Relationship between Output and Employment…”, Review of Economic Studies, July 1965
Kuh, “Cyclical and Secular Labor Productivity…”, Review of Economics and Statistics, February 1965
Wilson and Eckstein, “Short-Run Productivity Behavior…”, Review of Economics and Statistics, February 1964.
- Measuring Potential Output and the Gap
Thurow & Taylor, “The Interaction between Actual and Potential Rates of Growth in the U.S. Economy”, Mimeo.
Kuh, “The Measurement of Potential Output”, mimeo.
- Cycles and Fluctuations
Samuelson, “Interaction between Multiplier Analysis and the Principle of Acceleration”, Review of Economics and Statistics, 1939, reprinted in AEA, Readings in Business Cycle Theory.
Metzler, “The Nature and Stability of Inventory Cycles”, Review of Economics and Statistics, 1941.
Kaldor, “A Model of the Trade Cycle”, EJ 1940, reprinted in Hansen and Clemence, Readings in Business Cycles and National Income.
DeLeeuw, “The Demand for Capital Goods by Manufacturers”, Econometrica, July 1962.
Eckstein, “Manufacturing Investment and Business Expectations”, Econometrica, April 1965.
Jorgenson, “Anticipations and Investment Behavior”, Ch. 2 in The Brookings Quarterly Econometric Model of the U.S., (optional).
Darling and Lovell, “Factors Influencing Investment in Inventories”, Ch. 4 in The Brookings Quarterly Econometric Model of the U.S.
Okun, Effects of the Tax Cut of 1964. To appear or else mimeo. [handwritten addition]
- Integration of Growth & Effective Demand [handwritten addition, no items listed]
First Examination 14.452 April 13, 1966
- Imagine a one-sector economy, satisfying all the standard simplifying assumptions, in a steady state with constant saving ratio, constant rate of population growth, and no technological change. Now let there be a sudden once-and-for-all shift in technology, with the property that output per man increases by 10% at each and every capital-per-man. There is no change in saving ratio or population growth.
- What happens along the full-employment path?
- In the new steady state, has capital per man increased by more or less than 10%? Has output per man increase by more or less than 10%?
- Describe roughly how the competitively imputed real wage, rate of interest, and relative distribution of income might differ between the new steady-state and the old. (You will not always be able to settle the direction of change.)
- In the same sort of economy, suppose that investment demand is such that businesses will quickly snap up all investment opportunities yielding at least some “target rate of return”, like 20%, but none yielding less. Discuss in terms of diagram or otherwise, whether the economy is likely to experience inadequate or excessive aggregate demand near the steady state. What effect would a sudden increase in the rate of population growth have (assuming that the saving ratio was not affected)?
- Denison has been described as a pessimist with respect to the possibility of raising the U.S. rate of growth through deliberate policy. Is that a fair description? If so, what are the main sources of his pessimism? What do you gather from Nelson, Abramovitz and Phelps on this subject?
Source: Duke University, David M. Rubenstein Library. Economists’ Papers Archives. Papers of Robert M. Solow, Box 67, Folder “Exams”.
Image Source: Robert M. Solow (undated). MIT Museum .