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Adjusting Theory to Reality: The Role of Aggregate Demand in Kaldor's Late Contributions on Economic Growth

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  • Antonella Palumbo

Abstract

This paper deals with the analysis of growth and development Nicholas Kaldor formulated in the later part of his career, during the 1970s and 1980s. Kaldor's passage from a resource-constrained to a demand-driven conception of growth was closely connected to his persistent effort to make economic theory more realistic and relevant, and led him to a complex vision of the growth process, with historical and institutional factors playing a fundamental role. However, the particular formulation in which Kaldor expressed his ideas about the strategic role of exports in the growth process, namely the long-period foreign trade multiplier, cannot fully capture the main characterisitcs of his vision of the growth process, and is in some respects contradictory with that vision. A critical role is played by Kaldor's conception of the determinants of investment, which, as in his full-employment growth models, he treats as entirely induced by output growth, and hence as not posing limits, in normal conditions, on output expansion.

Suggested Citation

  • Antonella Palumbo, 2009. "Adjusting Theory to Reality: The Role of Aggregate Demand in Kaldor's Late Contributions on Economic Growth," Review of Political Economy, Taylor & Francis Journals, vol. 21(3), pages 341-368.
    • Handle: RePEc:taf:revpoe:v:21:y:2009:i:3:p:341-368
    DOI: 10.1080/09538250903073362
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    References listed on IDEAS

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    1. Daniele Besomi (ed.), 2003. "The Collected Interwar Papers and Correspondence of Roy Harrod," Books, Edward Elgar Publishing, volume 0, number 3068.
    2. Joan Robinson, 1962. "Essays in the Theory of Economic Growth," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-00626-7.
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    Cited by:

    1. Sergio Parrinello, 2014. "A search for distinctive features of demand-led growth models," PSL Quarterly Review, Economia civile, vol. 67(270), pages 309-342.
    2. Mark Setterfield, 2010. "Endogenous Growth: A Kaldorian Approach," Working Papers 1001, Trinity College, Department of Economics.
    3. Mark Setterfield, 2013. "Exploring the supply side of Kaldorian growth models," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(1), pages 22-36, January.
    4. Matteo Deleidi & Claudia Fontanari & Santiago José Gahn, 2023. "Autonomous demand and technical change: exploring the Kaldor–Verdoorn law on a global level," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 57-80, April.
    5. Satya prasad Padhi, 2015. "The Role of Aggregate Demand in Kaldor's Late Contributions to Economic Growth: A Comment on Palumbo," Review of Political Economy, Taylor & Francis Journals, vol. 27(3), pages 442-449, July.
    6. Ahmad A. Borazan, 2015. "On the Way to the Great Depression, The Demand Regime of the US Economy (1900-1929)," Working Paper Series, Department of Economics, University of Utah 2015_02, University of Utah, Department of Economics.
    7. Mark Setterfield, 2014. "Economic Growth and Development," Working Papers 1404, Trinity College, Department of Economics.
    8. João Gabriel de Araujo Oliveira & Joanilio Rodolpho Teixeira, 2020. "A note reconsidering a post‐Keynesian model of growth and distribution in the globalization context," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 487-495, July.
    9. Antonella Palumbo, 2015. "The Role of Aggregate Demand in Kaldor's Late Contributions to Economic Growth: A Reply," Review of Political Economy, Taylor & Francis Journals, vol. 27(3), pages 450-456, July.
    10. Franklin Serrano & Fabio Freitas, 2016. "The Sraffian Supermultiplier As An Alternative Closure To Heterodox Growth Theory," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 107, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. Annamaria Simonazzi & Andrea Ginzburg & Gianluigi Nocella, 2013. "Economic relations between Germany and southern Europe," Cambridge Journal of Economics, Oxford University Press, vol. 37(3), pages 653-675.

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