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Paul Samuelson’s ways to macroeconomic dynamics

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  • Mauro Boianovsky

Abstract

Samuelson kept optimisation-based problems separated from macroeconomic dynamics in his Foundations, where dynamics was defined in terms of difference and differential equations. Despite some criticism of his “correspondence principle” of stability analysis by D.F. Gordon, D. Patinkin and others, it was only in the 1970s that Samuelson’s separation was effectively challenged, particularly by R. E. Lucas. After the Foundations, Samuelson developed dynamic optimisation models, sometimes featuring representative agents, but he did not extend that to the study of macroeconomic fluctuations. Neither did he accept market clearing inter-temporal maximisation as a solution to the micro-foundations problem that beset his models of macroeconomic dynamics. His 1988 nonlinear non-optimising business cycle model was his last contribution to dynamics. Eventually, Samuelson disentangled his 1965 “efficient market hypothesis” of financial economics from rational expectations and claimed that the former should form one of the pillars of macroeconomic dynamics, together with imperfectly competitive markets for goods and labour.

Suggested Citation

  • Mauro Boianovsky, 2020. "Paul Samuelson’s ways to macroeconomic dynamics," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 27(4), pages 606-634, July.
    • Handle: RePEc:taf:eujhet:v:27:y:2020:i:4:p:606-634
    DOI: 10.1080/09672567.2020.1767670
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    Cited by:

    1. Assous, Michaël & Boianovsky, Mauro & Dávila-Fernández, Marwil J., 2024. "Samuelson's last macroeconomic model: Secular stagnation and endogenous cyclical growth," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 417-426.
    2. Vincent Carret, 2021. "Rupture and continuity in the original divide between micro-dynamics and macro-dynamics," Working Papers halshs-03242180, HAL.
    3. Fengsheng Chien & YunQian Zhang & Arshian Sharif & Muhammad Sadiq & Minh Vu Hieu, 2023. "Does air pollution affect the tourism industry in the USA? Evidence from the quantile autoregressive distributed lagged approach," Tourism Economics, , vol. 29(5), pages 1164-1180, August.

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