Quality: an economy will always converge to

Quality:

Regarding the quality of his paper, firstly, one can see that as of
11-01-18 Kaldor has been cited 2673 times. This however is only an indicator of
popularity and not quality. Secondly, regarding the amount of citations, his
paper outranks any other regarding the same topic. Thirdly, the fact that the
economic journal, one with a high reputation for quality, published his paper. And
finally, throughout his paper Kaldor keeps a clean structure of argumentation and
citations. All in all, strong indicators for a good scientific paper

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Summary:

 

In his paper (A Model of
Economic Growth, published in Dec. 1957 by Wiley, Nicholas) Kaldor modifies the
economic model of Harrod. He postulates that production factors such as changes
in technology are of more importance his predecessors assumed to be. To support
this, he identifies two factors of production; Labour and Capital as well as
two factors of income; Profit and Wages. He suggests that the Capital/Output
ratio and rate of profits earned investments are constant in the long run. This
implicates that in equilibrium an economy will always converge to a state of
full employment.

 

In his own model that Kaldor
concludes that advancements in technology are the main driver for growth in
output. He postulates that any increase in capital per worker is associated
with some new technology and vice versa. Hence, in the long run any changes in
the production function are to be explained by a technological advancement
implemented or yet to be implemented.

 

Kaldor distinguishes two
cases for his model. Firstly, a constant working population and secondly, an expanding
population. For both cases he shows that under his economic model, firstly in
the long run an economy will always converge to a state of full-employment and
secondly, that the main drivers for growth are technological advancements.

 

Kaldor distinguishes two stages
of capitalism following a major technological advance.  The First stage is an accumulation of capital
until one has reached the desired level. This is followed by the second stage where
production, employment and wages grow.

 

Kaldor concludes that when
considering that his model solely holds in the long run, his assumption of
technological advances as the driver are true. However, he points out that they
are not stable, and that the occurrence of a ground-breaking invention is almost
completely arbitrary. Hence his model will only be stable in the long run.