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Harrodians and Kaleckians: a suggested reconciliation and synthesis

Author

Listed:
  • Mark Setterfield

    (Department of Economics, New School for Social Research)

Abstract

The Kaleckian and Harrodian approaches to growth frequently arrive at antagonistic positions with respect to key issues in heterodox macrodynamics, including the treatment of the rate of capacity utilization and the very nature of the long-run growth process. Nevertheless, this paper is devoted to exploring the possibilities for reconciling and even synthesizing these traditions. It does so by directly addressing three key areas of dispute: the Keynesian stability condition; Harrodian instability; and the question as to whether long-run growth is best conceived in terms of a stable steady state or `corridor instability'. It is shown that reconciliation and even synthesis is possible - the latter producing a `corridor within a corridor' conception of the growth process in which the economy switches between Kaleckian and Harrodian dynamics depending on the extent to which the rate of capacity utilization departs from its normal rate.

Suggested Citation

  • Mark Setterfield, 2021. "Harrodians and Kaleckians: a suggested reconciliation and synthesis," Working Papers 2111, New School for Social Research, Department of Economics, revised Jan 2022.
    • Handle: RePEc:new:wpaper:2111
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Keynesian stability condition; Harrodian instability; corridor instability; shifting equilibrium; Kaleckian pseudo-instability; normal rate of capacity utilization;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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