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The debate about Sraffian Supermultiplier Model and the future of heterodox growth models

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  • Jose Luís da Costa Oreiro
  • Guilherme Jonas Costa da Silva
  • Júlio Fernando Costa Santos

Abstract

This paper aims to present the recent debate about Sraffian Supermultiplier Model (SSM), that gained notoriety in the academic environment after the controversy between Peter Skott (2016) and Marc Lavoie (2016, 2017) on the specification of the investment function of the Neo-Kaleckian models of income growth and distribution. Lavoie used the SSM model as an attempt to rescue the Neo-Kaleckians models of the devastating criticism made by Peter Skott (2010) regarding the specification of the investment function. In this context, we will not only argue that this rescue operation was not successful, but we will also question the capacity of SSM models to serve as an “alternative closure” for heterodox models of income growth and distribution, due to three fundamental shortcomings of the SSM approach, which are: (i) the hypothesis that the normal degree of utilization of the productive capacity is an exogenous variable, (ii) that investment in capacity expansion is totally endogenous; and (iii) the applicability of this approach out of a closed economy framework. We will also argue that the Kaldorian models of growth, which are one of the theoretical foundations of the so-called Developmentalist Macroeconomics, and stock-flow consistent models (SFC) seem to be much more promising alternatives for the development of heterodox theories of growth and income distribution. JEL Classification: E12; E37; P10.

Suggested Citation

  • Jose Luís da Costa Oreiro & Guilherme Jonas Costa da Silva & Júlio Fernando Costa Santos, 2020. "The debate about Sraffian Supermultiplier Model and the future of heterodox growth models," Brazilian Journal of Political Economy, Center of Political Economy, vol. 40(3), pages 510-531.
    • Handle: RePEc:ekm:repojs:v:40:y:2020:i:3:p:510-531:id:2037
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/2037/2023
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    Citations

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    Cited by:

    1. Peter Skott & Júlio Fernando Costa Santos & José Luís da Costa Oreiro, 2022. "Supermultipliers, ‘endogenous autonomous demand’ and functional finance," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 220-244, February.
    2. Araujo, Ricardo Azevedo & Teixeira, Joanilio Rodolpho, 2021. "An appraisal of neo-Kaldorian theories from a structural economic dynamics perspective," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 247-255.

    More about this item

    Keywords

    Sraffian Supermultiplier; heterodox growth models; stock-flow consistent models; developmentalist macroeconomics;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • P10 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - General

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