ABSTRACT
In this chapter compares the Pasinetti's model formalizing Ricardian growth theory and Rebelo's model, which is one of the simplest models developed within the 'new' growth literature. The chapter starts with the description of technology used by Pasinetti. By introducing into it the assumption that workers consume only gold and that the wage rate is fixed in terms of gold instead of corn, the description of technology depicted by Rebelo is obtained. It determines prices and distribution variables. Therefore Pasinetti's and Rebelo's models, having the same structural framework, can be interpreted as two different phases of the transition of the economy from the early Industrial Revolution to mature capitalism. A comparison with the results obtained by Pasinetti and Rebelo is also provided. The chapter deals with dynamical systems, and the equivalence among the models studied by Pasinetti and Rebelo is obtained.
