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Economic growth, business cycles and products variety: exploring the role of demand satiety

Author

Listed:
  • Benoît Desmarchelier

    (Xi’An Jiaotong-Liverpool University)

  • Faridah Djellal

    (Lille 1 University)

  • Faïz Gallouj

    (Lille 1 University)

Abstract

The paper presents a model of economic growth based on a population of heterogeneous and interacting agents. This model succeeds to generate - in a single framework - GDP growth and cycles as well as product life cycles. Contrary to the existing literature, we find that an increasing variety of consumer goods is not a necessary condition for sustaining the economic growth when consumers are subject to satiation. Indeed, intensive creative-destruction - that is an intensive process of sectors births and deaths - appears to be a more powerful growth engine. We also find that changing consumers’ satiety thresholds is likely to affect the nature of the correlation between the cyclical components of macroeconomic time series.

Suggested Citation

  • Benoît Desmarchelier & Faridah Djellal & Faïz Gallouj, 2017. "Economic growth, business cycles and products variety: exploring the role of demand satiety," Journal of Evolutionary Economics, Springer, vol. 27(3), pages 503-529, July.
    • Handle: RePEc:spr:joevec:v:27:y:2017:i:3:d:10.1007_s00191-017-0498-4
    DOI: 10.1007/s00191-017-0498-4
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    More about this item

    Keywords

    Economic growth; Creative destruction; Product variety; Demand satiety; Agent-based modeling;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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