Solow in 2008
Robert Merton Solow
August 23, 1924
|Institution||Massachusetts Institute of Technology|
|Alma mater||Harvard University|
| Francis M. Bator |
Ronald W. Jones
Harvey M. Wagner
Arjun Kumar Sengupta
Robert J. Gordon
|Other notable students||Mario Draghi|
|Contributions||Exogenous growth model|
|Awards|| John Bates Clark Medal (1961)|
Nobel Memorial Prize in Economic Sciences (1987)
National Medal of Science (1999)
Presidential Medal of Freedom (2014)
|Information at IDEAS / RePEc|
Robert Merton Solow, GCIH ( // ; born August 23, 1924), is an American economist, particularly known for his work on the theory of economic growth that culminated in the exogenous growth model named after him. He is currently Emeritus Institute Professor of Economics at the Massachusetts Institute of Technology, where he has been a professor since 1949. He was awarded the John Bates Clark Medal in 1961, the Nobel Memorial Prize in Economic Sciences in 1987, and the Presidential Medal of Freedom in 2014. Four of his PhD students, George Akerlof, Joseph Stiglitz, Peter Diamond and William Nordhaus later received Nobel Memorial Prizes in Economic Sciences in their own right.
Robert Solow was born in Brooklyn, New York, into a Jewish family on August 23, 1924, the oldest of three children. He regarded his parents as being very intelligent people but were not able to go to college due to the necessity to work.He was well educated in the neighborhood public schools and excelled academically early in life. In September 1940, Solow went to Harvard College with a scholarship at the age of 16. At Harvard, his first studies were in sociology and anthropology as well as elementary economics.
Due to the attack on Pearl Harbor in 1941, the following year Solow left the university and joined the U.S. Army. Having been fluent in German, the Army put him in a task force whose primary purpose was to intercept, interpret, and send back German messages to base.He served briefly in North Africa and Sicily, and later served in Italy during World War II until he was discharged in August 1945. Shortly after returning, he proceeded to marry his girlfriend, Barbara Lewis, whom he was only dating for six months.
He returned to Harvard in 1945, and studied under Wassily Leontief. As his research assistant he produced the first set of capital-coefficients for the input–output model. Then he became interested in statistics and probability models. From 1949–50, he spent a fellowship year at Columbia University to study statistics more intensively. During that year he was also working on his Ph.D. thesis, an exploratory attempt to model changes in the size distribution of wage income using interacting Markov processes for employment-unemployment and wage rates.
In 1949, just before going off to Columbia he was offered and accepted an assistant professorship in the Economics Department at Massachusetts Institute of Technology. At M.I.T. he taught courses in statistics and econometrics. Solow's interest gradually changed to macroeconomics. For almost 40 years, Solow and Paul Samuelson worked together on many landmark theories: von Neumann growth theory (1953), theory of capital (1956), linear programming (1958) and the Phillips curve (1960).
Solow also held several government positions, including senior economist for the Council of Economic Advisers (1961–62) and member of the President's Commission on Income Maintenance (1968–70). His studies focused mainly in the fields of employment and growth policies, and the theory of capital.
In 1961 he won the American Economic Association's John Bates Clark Award, given to the best economist under age forty. In 1979 he served as president of that association. In 1987, he won the Nobel Prize for his analysis of economic growthand in 1999, he received the National Medal of Science. In 2011, he received an honorary degree in Doctor of Science from Tufts University.
Solow is the founder of the Cournot Foundation and the Cournot Centre. After the death of his colleague Franco Modigliani, Solow accepted an appointment as new Chairman of the I.S.E.O Institute, an Italian nonprofit cultural association which organizes international conferences and summer schools. He is a trustee of the Economists for Peace and Security.
Solow's past students include 2010 Nobel Prize winner Peter Diamond, as well as Michael Rothschild, Halbert White, Charlie Bean, Michael Woodford, and Harvey Wagner. He is ranked 23rd among economists on RePEc in terms of the strength of economists who have studied under him.
Solow was one of the signees of a 2018 amici curiae brief that expressed support for Harvard University in the Students for Fair Admissions v. Harvard lawsuit. Other signees of the brief include Alan B. Krueger, George A. Akerlof, Janet Yellen, Cecilia Rouse, as well as numerous others.
Solow's model of economic growth, often known as the Solow–Swan neo-classical growth model as the model was independently discovered by Trevor W. Swan and published in "The Economic Record" in 1956, allows the determinants of economic growth to be separated into increases in inputs (labour and capital) and technical progress. The reason these models are called "exogenous" growth models is the saving rate is taken to be exogenously given. Subsequent work derives savings behavior from an inter-temporal utility-maximizing framework. Using his model, Solow (1957) calculated that about four-fifths of the growth in US output per worker was attributable to technical progress.
Solow also was the first to develop a growth model with different vintages of capital.The idea behind Solow's vintage capital growth model is that new capital is more valuable than old (vintage) capital because new capital is produced through known technology.He first states that capital must be a finite entity because all of the resources on the earth are indeed limited. Within the confines of Solow's model, this known technology is assumed to be constantly improving. Consequently, the products of this technology (the new capital) are expected to be more productive as well as more valuable. The idea lay dormant for some time perhaps because Dale W. Jorgenson (1966) argued that it was observationally equivalent with disembodied technological progress, as advanced earlier in Solow (1957). It was successfully pushed forward in subsequent research by Jeremy Greenwood, Zvi Hercowitz and Per Krusell (1997), who argued that the secular decline in capital goods prices could be used to measure embodied technological progress. They labeled the notion investment-specific technological progress. Solow (2001) approved. Both Paul Romer and Robert Lucas, Jr. subsequently developed alternatives to Solow's neo-classical growth model.
To better communicate the meaning behind his work, Solow used a graphical design to illustrate his concepts. On the x-axis he puts capital per worker and for the y-axis he uses output per worker. The reason for graphing capital and output per worker is due to his assumption that the nation is at full employment. The first (top) curve represents the output produced at each given level of capital. The second (middle) curve shows the depreciating nature of capital which remains constantly positive. The third curve (bottom) conveys savings/investment per worker. As the old machinery wears down and breaks, new ones must be bought to replace the old. The point where the two lines meet is known as the steady state level, which means that the nation is producing just enough to be able to replace their old capital. Countries that are closer to the steady state level, on the left side, grow slower when compared to countries closer to the vertex of the graph. However, when countries are to the right of the steady state level, are not growing because all the returns they create needs to go to replacing and repairing their old capital.
Since Solow's initial work in the 1950s, many more sophisticated models of economic growth have been proposed, leading to varying conclusions about the causes of economic growth. For example, rather than assuming, as Solow did, that people save at a given constant rate, subsequent work applied a consumer-optimization framework to derive savings behavior endogenously, allowing saving rates to vary at different points in time, depending on income flows, for example. In the 1980s efforts have focused on the role of technological progress in the economy, leading to the development of endogenous growth theory (or new growth theory). Today, economists use Solow's sources-of-growth accounting to estimate the separate effects on economic growth of technological change, capital, and labor.
Solow currently is an emeritus Institute Professor in the MIT economics department, and previously taught at Columbia University.
In the early 1960s the Massachusetts Institute of Technology (MIT) was the native land of the "growthmen." Its leading light, Paul Samuelson, had published a pathbreaking undergraduate textbook, Economics: An Introductory Analysis. In the sixth edition of Economics, Samuelson (1964) added a "new chapter on the theory of growth." Samuelson drew on the work on growth theory of his younger colleague Robert Solow (1956)—an indication that growthmanship was taking an analytical turn. The MIT economists were thus growthmen in two senses: in seeing growth as an absolutely central policy imperative and in seeing the theory of growth as a focus for economic research. What the MIT growthmen added was a distinctive style of analysis that made it easier to address the dominant policy concerns in tractable formal models. Solow's (1956) model was the perfect exemplar of the MIT style. It provided the central framework for the subsequent developments in growth theory and secured MIT as the center of the universe in the golden age of growth theory in the 1960s (Boianovsky and Hoover 199–200).
The native land of the "growthmen" was naturally not for long reduced to MIT. The MIT growthmen soon set their sights to larger expanses of both policy and academic terrain. Growthmen far and wide coalesced to this nascent movement, led by Solow and Samuelson. Soon, most of the country, if not the world, had become "growthmen". In view of the growthmen school, growth was seen in four to five difference perspectives. First, as a central policy initiative; second, as a subject for continued research; third, as a culture and way of life; fourth, as a religious belief; and fifth, debatable, as ushering in a golden age of growthmen.
James Tobin was an American economist who served on the Council of Economic Advisers and the Board of Governors of the Federal Reserve System, and taught at Harvard and Yale Universities. He developed the ideas of Keynesian economics, and advocated government intervention to stabilize output and avoid recessions. His academic work included pioneering contributions to the study of investment, monetary and fiscal policy and financial markets. He also proposed an econometric model for censored dependent variables, the well-known Tobit model. Along with fellow Neo-Keynesian economist James Meade in 1977, Tobin proposed nominal GDP targeting as a monetary policy rule in 1980. Tobin received the Nobel Memorial Prize in Economic Sciences in 1981 for "creative and extensive work on the analysis of financial markets and their relations to expenditure decisions, employment, production and prices."
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The Solow–Swan model is an economic model of long-run economic growth set within the framework of neoclassical economics. It attempts to explain long-run economic growth by looking at capital accumulation, labor or population growth, and increases in productivity, commonly referred to as technological progress. At its core is a neoclassical (aggregate) production function, often specified to be of Cobb–Douglas type, which enables the model "to make contact with microeconomics". The model was developed independently by Robert Solow and Trevor Swan in 1956, and superseded the Keynesian Harrod–Domar model.
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