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This neoclassical formulation had also been formalized by Alfred Marshall. However, it was the general equilibrium of Walras that helped solidify the research in economic science as a mathematical and deductive enterprise, the essence of which is still neoclassical and makes up what is currently found in mainstream economics textbooks to this day.
However, the neoclassical theory also asks what exactly is causing the supply and demand behaviors of buyers and sellers, and how exactly the preferences and productive abilities of people determine the market prices. Therefore, the neoclassical theory of value is a theory of these forces: the preferences and productive abilities of humans.
The Ramsey–Cass–Koopmans model, or Ramsey growth model, is a neoclassical model of economic growth based primarily on the work of Frank P. Ramsey in 1928, [1] with significant extensions by David Cass and Tjalling Koopmans in 1965.
Post-Keynesian economists, on the other hand, reject the neoclassical synthesis and, in general, neoclassical economics applied to the macroeconomy. Post-Keynesian economics is a heterodox school that holds that both neo-Keynesian economics and New Keynesian economics are incorrect, and a misinterpretation of Keynes's ideas. The post-Keynesian ...
The Harrod–Domar model dominated growth theory until Robert Solow [c] and Trevor Swan [d] independently developed neoclassical growth models in 1956. [55] Solow and Swan produced a more empirically appealing model with "balanced growth" based on the substitution of labor and capital in production. [59]
The neoclassical synthesis (NCS), or neoclassical–Keynesian synthesis [1] is an academic movement and paradigm in economics that worked towards reconciling the macroeconomic thought of John Maynard Keynes in his book The General Theory of Employment, Interest and Money (1936) with neoclassical economics.
The Harrod–Domar model was the precursor to the exogenous growth model. [4] Neoclassical economists claimed shortcomings in the Harrod–Domar model—in particular the instability of its solution [5] —and, by the late 1950s, started an academic dialogue that led to the development of the Solow–Swan model. [6] [7]
Current neoclassical, Keynesian and endogenous growth theories do not consider a growth imperative [3] or explicitly deny it, such as Robert Solow. [4] In neoclassical economics, adherence to economic growth would be a question of maximizing utility, an intertemporal decision between current and future consumption (see Keynes–Ramsey rule). [5]