Cambridge Distribution in a World Economy
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Date
1999Author
O'Connell, Joan
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O'Connell, J. (1999) "Cambridge Distribution in a World Economy"(Working Paper No. 0042) Department of Economics, National University of Ireland, Galway.
Abstract
The paper outlines a two-country Cambridge model of growth and distribution. The condition for the Cambridge equation to apply to the world economy is outlined. When this is satisfied, a dual theorem holds in one of the two countries, and the country with the greater aggregate savings ratio is in current account surplus. The original Cambridge model was formulated as a means of equating the warranted and natural growth rates of Harrod (1939) and Domar (1946) for the case of a closed economy. Thus, the world version is a method of satisfying Harrod's requirement that his model be capable of extension so as to include foreign trade.