In December 1998 it will be exactly 70 years F. P. Ramsey laid the foundations of modern neo-classical growth theory. However, during The Great Depression of the 1930s the Ramsey's work fell into oblivion. In mid-1950s the interest in the growth theory started to revive again, and R. M. Solow and T. W. Swan created what is now called Solow model. When the Ramsey model was re-discovered in mid-1960s, it became clear how much ahead the Ramsey's work was. In the Ramsey model, the consumption and saving behavior is put strictly on the microeconomic grounds and it is analyzed through a dynamic optimization of fundamentally rational economic agents. The importance of the Ramsey model reflects also in the fact, that its modifications were later used as an analytical tool in other fields of economics as well, for example in the supply-side economics and the business cycles theory.
