Keynesian Growth: the Cambridge version

Macroeconomics and Monetary Economics

Article

The heroic entrepreneurs of Schumpeter are resurrected, only slightly less heroically, in The General Theory (1936) of J.M. Keynes. Investment, in the Keynesian system, is an independent affair contingent upon finance and the "animal spirits" of entrepreneurs. The issue is that Keynes did not extend his theory of demand-determined equilibrium into a theory of growth. This was left for the Cambridge Keynesians to explore. The first to come up with an extension was Sir Roy F. Harrod who (concurrently with Evsey Domar) introduced the "Harrod-Domar" Model of growth (Harrod in 1939, Domar in 1946).