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Economic Policy In A Growth Context: A Classical Synthesis Of Keynes And Harrod

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  • Anwar Shaikh

Abstract

This paper clarifies key differences between Harrodian and Keynesian theories and policies, and develops a classical alternative to both. The stability of the Harrodian warranted path is proved, and the Keynesian paradox of thrift is shown to be transient. Distinct Harrodian fiscal policies are derived, and Post‐Keynesian debates about Harrodian dynamics are addressed. Finally, it is argued that business and household savings are fundamentally different, and it is shown that if the business savings rate responds at all to the investment–savings gap, it becomes possible to have both profit‐driven accumulation as in Keynes and normal capacity growth as in Harrod.

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  • Anwar Shaikh, 2009. "Economic Policy In A Growth Context: A Classical Synthesis Of Keynes And Harrod," Metroeconomica, Wiley Blackwell, vol. 60(3), pages 455-494, July.
    • Handle: RePEc:bla:metroe:v:60:y:2009:i:3:p:455-494
    DOI: 10.1111/j.1467-999X.2008.00347.x
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