J. Tobin: Marginal Productivity, Money and Growth
A novel attempt to blend a Keynesian and neoclassical growth system, complete with marginal analysis, is presented by James Tobin in a paper on ‘Money and Economic Growth’.1 As the title suggests, the paper is an attempt to analyse the role of money in a model of economic growth. Tobin attempts to monetise a standard neoclassical model by means of emphasising the Keynesian consumption—savings—money-holding decisions via his well-known concept of portfolio balance. The two-sided decision, to save or spend, and what form to hold savings, is the crux of the Keynesian format of the model. Unfortunately these savings and portfolio decisions are the only Keynesian aspects of the model. Tobin’s model is neoclassical in all other aspects and it assumes full employment and the applicability of Say’s Law.2
KeywordsCapital Stock Physical Capital Marginal Productivity Natural Rate Full Employment
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- 2.R. F. Harrod, Economic Essays ( London: Macmillan, 1952 ) 260.Google Scholar