Tackling the instability of growth: A Kaleckian model with autonomous demand expenditures
AbstractThis article presents a Kaleckian model enriched by introducing autonomous public expenditure which grows at an exogenous rate. It shows that the usual properties are not affected in the short run: growth is wage-led. But long run properties are strongly affected: public expenditure plays a role as an automatic stabilizer so that the accumulation rate converges on the growth rate of public expenditure. The effect of a change in income distribution on the growth rate is then only transient. However, the impacts on the level of variables (output, capital stock, labor, etc.) remain permanent. The research here also shows that this theoretical framework can provide a solution (depending on the parameters) to the ‘second’ Harrod knife-edge problem. In this case, Kaleckian outcomes are consistent with the convergence of the current utilization rate on the ‘normal’ rate, a result which has not been found in the existing literature.
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Bibliographic InfoPaper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 13026.
Length: 23 pages
Date of creation: Mar 2013
Date of revision:
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Kaleckian models; utilization rate; Harrod instability; income distribution; automatic stabilizers.;
Other versions of this item:
- Olivier Allain, 2013. "Tackling the instability of growth: A Kaleckian model with autonomous demand expenditures," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00821080, HAL.
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-06 (All new papers)
- NEP-MAC-2013-04-06 (Macroeconomics)
- NEP-PBE-2013-04-06 (Public Economics)
- NEP-PKE-2013-04-06 (Post Keynesian Economics)
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