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The impossible quartet in a demand led growthsupermultiplier model for a small open economy

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  • José Luis Oreiro
  • Julio Fernando Costa Santos

Abstract

The aim of this paper is to investigate the long run sustainability of a growthpath led by multiple non-creating capacity autonomous expenditures in a demand led-supermultipliermodel for a small open economy. Using two different models the results show thatit is impossible to have in the same model long-term economic growth driven by the non-capacitycreating component of domestic demand, exogenous income distribution, long-run balance between productive capacity and aggregate demand and balance of payments equilibrium.Economic viability of the balanced-growth path demands growth to be led by exports,at least for small open economies. JEL Classification: E12; E37; P10

Suggested Citation

  • José Luis Oreiro & Julio Fernando Costa Santos, 2023. "The impossible quartet in a demand led growthsupermultiplier model for a small open economy," Brazilian Journal of Political Economy, Center of Political Economy, vol. 43(3), pages 592-618.
    • Handle: RePEc:ekm:repojs:v:43:y:2023:i:3:p:592-618:id:2417
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    More about this item

    Keywords

    Post-Keynesian economics; growth and distribution; Sraffian supermutiplier; simulation models;
    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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