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Structural transformations and cumulative causation towards an evolutionary micro-foundation of the Kaldorian growth model

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  • Lorentz, André

    (Université de Strasbourg, BETA, Université de Lorraine, CNRS)

  • Ciarli, Tommaso

    (UNU-MERIT, Maastricht University, and SPRU, University of Sussex)

  • Savona, Maria

    (SPRU, University of Sussex)

  • Valente, Marco

    (University of L’Aquila)

Abstract

We derive the Kaldorian cumulative causation mechanism as an emergent property of the dynamics generated by a micro-founded model. We build on an evolutionary growth model which formalises the endogenous relations between structural changes in the production, organisation and functional composition of employment and of consumption patterns (originally proposed by Ciarli et al, 2010). We discuss the main transition dynamics to a self- sustained growth regime in a two-stage growth pattern generated through the numerical simulations of the model. We then show that these mechanisms lead to the emergence of a Kaldor-Verdoorn law. Finally we show that the structure of demand shapes the type of growth regime emerging from the endogenous structural changes, fostering or hampering the emergence of the Kaldor Verdoorn law. This depends on the endogenous income distribution and heterogeneity in consumption behaviour

Suggested Citation

  • Lorentz, André & Ciarli, Tommaso & Savona, Maria & Valente, Marco, 2022. "Structural transformations and cumulative causation towards an evolutionary micro-foundation of the Kaldorian growth model," MERIT Working Papers 2022-001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2022001
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    More about this item

    Keywords

    Structural change; economic growth; final consumption; technological change; cumulative causation; evolutionary economics; Kaldor-Verdoorn Law;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian

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