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Demand‐led growth with endogenous innovation

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  • Mauro Caminati
  • Serena Sordi

Abstract

This paper contributes to the recent macro‐dynamics literature on demand‐led growth, drawing upon the seminal idea that the implications of Harrodian instability may be tamed by a source of autonomous expenditure in the economy. Contrary to the other contributions in this literature, real autonomous expenditure is not growing at an exogenously given rate, and partly consists of a flow of profit‐seeking R&D and innovation expenditures raising labour productivity through time. If the state of distribution, hence the wage share, is exogenously fixed and constant, the model gives rise to dynamics in a two dimensional state space, that may converge to, or give rise to a limit cycle around, an endogenous growth path. An exogenous rise of the profit share exerts negative effects on long‐run growth and employment, showing that growth is wage led.

Suggested Citation

  • Mauro Caminati & Serena Sordi, 2019. "Demand‐led growth with endogenous innovation," Metroeconomica, Wiley Blackwell, vol. 70(3), pages 405-422, July.
    • Handle: RePEc:bla:metroe:v:70:y:2019:i:3:p:405-422
    DOI: 10.1111/meca.12243
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    Cited by:

    1. Nomaler, Önder & Spinola, Danilo & Verspagen, Bart, 2021. "R&D-based economic growth in a supermultiplier model," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 1-19.
    2. Joana David Avritzer & Lídia Brochier, 2022. "Household credit-financed consumption and the debt service ratio: tackling endogenous autonomous demand in the Supermultiplier model," Working Papers PKWP2219, Post Keynesian Economics Society (PKES).
    3. Andrea Borsato, 2021. "Does the Secular Stagnation hypothesis match with data? Evidence from USA," Working Papers of BETA 2021-11, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    4. Nomaler, Önder & Spinola, Danilo & Verspagen, Bart, 2020. "Schumpeter and Keynes: Economic growth in a super-multiplier model," MERIT Working Papers 2020-049, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Tavani, Daniele & Zamparelli, Luca, 2021. "Labor-augmenting technical change and the wage share: New microeconomic foundations," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 27-34.
    6. Önder Nomaler & Danilo Spinola & Bart Verspagen, 2024. "Demand‐led industrialisation policy in a dual‐sector small open economy," Metroeconomica, Wiley Blackwell, vol. 75(3), pages 339-376, July.
    7. Lídia Brochier, 2020. "Conflicting‐claims and labour market concerns in a supermultiplier SFC model," Metroeconomica, Wiley Blackwell, vol. 71(3), pages 566-603, July.
    8. Önder Nomaler & Danilo Spinola & Bart Verspagen, 2021. "Demand-led Industrialisation Policy in a Dual-sector Small Balance of Payments Constrained Economy," SARChI-ID Working Papers 2021-12, SARChI Industrial Development (SARChI-ID), University of Johannesburg (UJ), revised Sep 2021.
    9. Daniele Tavani & Luca Zamparelli, 2020. "Labor-Augmenting Technical Change and the Labor Share: New Microeconomic Foundations," Working Papers 2/20, Sapienza University of Rome, DISS.

    More about this item

    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
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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