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Effective Demand and Quantity Constrained Growth: A Simple Two-Sector Disequilibrium Approach

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  • Ogawa, Shogo

Abstract

In this study, we construct a simple disequilibrium growth model to explore the dynamic property of effective demand. This study's main concern is the effect of the quantity constraint: How do the quantities of consumption and investment goods demand and the productive capacity affect capital accumulation? To answer this, we build a two-sector growth model with quantity constraints. One interesting result is that consumption goods demand enhances capital accumulation when the capital is sufficiently accumulated but impedes it when the capital is insufficient. The latter case is shown as a shrinking path by graphical analysis and a numerical experiment.

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  • Ogawa, Shogo, 2019. "Effective Demand and Quantity Constrained Growth: A Simple Two-Sector Disequilibrium Approach," MPRA Paper 93336, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:93336
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    File URL: https://mpra.ub.uni-muenchen.de/93336/1/MPRA_paper_93336.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ogawa, Shogo, 2022. "Monetary growth with disequilibrium: A non-Walrasian baseline model," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 512-528.

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    More about this item

    Keywords

    Disequilibrium macroeconomics; Non-Walrasian analysis; Economic growth; Two-sectors; Quantity constraints;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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