Abstract
Growth models have an important place in the economics. These models try to reflect the behavior of an economy so that we can understand and analyze the growth mechanism in the economy. Growth theory first focusing on the production function tried to explain the growth in the physical production. However, in the real world, if the saving part of that production is not channeled into physical capital, the scenario of the early growth models cannot reflect the real world. In this sense, Tobin model has made the first step including money option for the individual saving portfolio and turned the growth model into the monetary growth model. In this study, we revisited important discussions on Tobin model and by conducting a critical analysis on the critically important features we are hoping to attract attention to the uncompleted arguments. In this manner we evaluate that the stableness of the equilibrium can be translated differently so that point needs to be cleared in described classification. The critical first step of articulation of saving portfolio can put the model in a strategic reference point situation as we would like to underline.
Highlights
Monetary growth models can be seen as a part of the evaluation of the growth theory
In Harrod- Domar model and Neo-classical real growth model[1], the effects of real variables are taken into account, yet the effects of the monetary variables are not considered in the models
1033 | P a g e discussions, Dimand, 2014; Dimand and Durlauf, 2009; Orphanides and Solow, 1990). We evaluate this first step of including money into the growth models has important to understand the behavior in today economies
Summary
Monetary growth models can be seen as a part of the evaluation of the growth theory. In this development stages, first we can see the development of the Harrod- Domar (Harrod, 1939; Domar, 1946) and Neo- Clasical real growth models. Combining the growth theory with the monetary theory, Tobin (1965) was first to take the money as a variable into account in a growth model Such an inclusion can analyze the existence of the long- term relationship of money supply with the real variables such as the equilibrium capital intensity, real wage and the per capita consumption. For the case of existence of such determined relationship, it can be searched for the optimum level of money supply in order to maximize the long- term growth rate In this development path, Tobin (1965) model represents the first step for its inclusion of money in the frame of a neo- classical real growth model.
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
