Lectures on Economic Growth.

Abstract

Not content with having revolutionised short‐run monetary theory, Robert Lucas has set out to rewrite long‐run growth theory. Since the mid 1980s he has been working towards a unified theory of growth and development, one that would account not only for the familiar stylised facts of golden‐age growth but also for the great divergence between rich and poor countries over the past two centuries. The present volume contains the five essays written so far in this research programme. Four of the essays have been published before. The fifth, and longest, is his 1997 Kuznets lecture, ‘The Industrial Revolution: Past and Future,’ published here for the first time. The first is his now classic 1985 Marshall Lecture, ‘On the Mechanics of Economic Development,’ and the third is his 1991 Fisher–Schultz Lecture, ‘Making a Miracle’. All the main ideas can be found in these three lectures. Lucas's central thesis is that economic development is all about human capital accumulation. Much of the book consists of models of intertemporal choice by infinitely‐lived families, focusing on the choice of how much time to devote to education. In ‘Mechanics’ he showed how such a model, augmented by human‐capital externalities, can produce sustained growth at an endogenous rate, and can also account for the fact that the return to a given combination of skills and physical capital is higher in industrialised countries than in the third world. In ‘Industrial Revolution’ he adds fertility to the list of choice variables and incorporates the quality/quantity (of children) trade‐off that others have argued is needed to explain the demographic changes that allowed the world's technology leaders to escape from Malthusian stagnation into sustained growth.

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