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Schumpeter Meeting Keynes: A Policy-Friendly Model of Endogenous Growth and Business Cycles

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  • Giovanni Dosi

    ()
    (Sant'Anna School of Advanced Studies, Pisa)

  • Giorgio Fagiolo

    ()
    (Sant'Anna School of Advanced Studies, Pisa)

  • Andrea Roventini

    ()
    (Department of Economics (University of Verona))

Abstract

This paper studies an agent-based model that bridges Keynesian theories of demandgeneration and Schumpeterian theories of technology-fueled economic growth. We employ the model to investigate the properties of macroeconomic dynamics and the impact of public polices on supply, demand and the \fundamentals" of the economy. We find that the complementarities between factors in uencing aggregate demand and drivers of technological change affect both "short-run" fluctuations and long-term growth patterns. From a normative point of view, simulations show a corresponding complementarity between Keynesian and Schumpeterian policies in sustaining long-run growth paths characterized by mild fluctuations and acceptable unemployment levels. The matching or mismatching between innovative exploration of new technologies and the conditions of demand generation appear to suggest the presence of two distinct "regimes" of growth (or absence thereof) characterized by different short-run fluctuations and unemployment levels.

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Bibliographic Info

Paper provided by University of Verona, Department of Economics in its series Working Papers with number 50/2008.

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Length: 33
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:ver:wpaper:50/2008

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Keywords: Endogenous Growth; Business Cycles; Growth Policies; Business Cycle Policies; Evolutionary Economics; Agent-Based Computational Economics; Post-Walrasian Economics; Empirical Validation; Monte-Carlo Simulations;

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