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Path dependency and the interdependences of demand and supply in macroeconomics

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  • Malcolm Sawyer

    () (University of Leeds, UK)

Abstract

The paper argues that macroeconomic analysis has to be based on path dependency which is treated as a broader concept than hysteresis. The ways in which path dependency necessarily arises in the context of the dual role of investment on demand and capacity formation are next considered. The effects of demand on the path of the economy are then considered in respect of the operations of the labour market and then technical change. The relationship between the 'short run' and the 'long run' in the form of the cycle and trend growth are considered leading simple formulations of aspects of such path dependency to postulate the way to consider the growth process.

Suggested Citation

  • Malcolm Sawyer, 2011. "Path dependency and the interdependences of demand and supply in macroeconomics," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 8(2), pages 281-297.
  • Handle: RePEc:elg:ejeepi:v:8:y:2011:i:2:p281-297
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    More about this item

    Keywords

    path dependency; hysteresis; classical dichotomy; macroeconomics;

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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