Economics at Harvard and MIT

The chapter deals with economics in the American Cambridge, at Harvard and MIT, with the rise to prominence of the MIT Department of Economics where Paul Samuelson, Robert Solow, Franco Modigliani and many other eminent economists made MIT the main center of the neoclassical synthesis in the United States and world. Samuelson’s Foundations of Economic Analysis, the end point of the evolution of analytical economics from Walras and Pareto to Hicks, is carefully analyzed. The analysis of the main works of Modigliani and Solow follows: Modigliani’s contributions to macroeconomic theory, designed to integrate Keynesian and classical monetary theory, to the theory of saving and to the theory of corporate finance, and Solow’s contributions to the theory of economic growth are analyzed. Lastly, the unemployment/price-inflation version of the Phillips curve made by Samuelson and Solow is considered.