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Income distribution and economic cycles in an open-economy supermultiplier model

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  • Dvoskin, Ariel
  • Torchinsky Landau, Matías

Abstract

We build a structuralist supermultiplier model for a small open economy with two sources of autonomous demand, government expenditures and exports. We find that, in the long run, there is a limit for government spending: its growth rate cannot exceed that of exports without generating an external crisis. However, there is a strong role for public policy, since there is nothing that automatically leads the economy to its maximum growth rate compatible with the external constraint to growth.

Suggested Citation

  • Dvoskin, Ariel & Torchinsky Landau, Matías, 2023. "Income distribution and economic cycles in an open-economy supermultiplier model," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 273-291.
    • Handle: RePEc:eee:streco:v:64:y:2023:i:c:p:273-291
    DOI: 10.1016/j.strueco.2022.12.012
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    More about this item

    Keywords

    Sraffian supermultiplier; Thirlwall's law; fiscal policy; public debt; income distribution;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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