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A search for distinctive features of demand-led growth models

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  • Sergio Parrinello

    (Sapienza University of Rome)

Abstract

This paper aims at a critical and constructive assessment of some extensions of Keynes's analysis of effective demand to the long period and growth. A criticism is addressed to a single-cause interpretation of the demand-led growth models and to the notion of normal capacity utilization adopted in such models. A positive argument tries to find a distinctive characterization of those extensions in the productive and financial conditions that make effective the autonomous changes in aggregate demand. It suggests a notion of normal capacity utilization as a range of distributions of normal utilization, related to the cost minimizing choice of techniques and to the persistence of the long term expectations of normal prices underlying the investment decisions. In such a context a long-period analysis with normal prices should avoid a dual steady growth where constant relative prices of capital goods correspond to constant proportions among the stocks of fixed capital.

Suggested Citation

  • Sergio Parrinello, 2014. "A search for distinctive features of demand-led growth models," PSL Quarterly Review, Economia civile, vol. 67(270), pages 309-342.
    • Handle: RePEc:psl:pslqrr:2014:34
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/12920/12724
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    1. Parrinello, Sergio, 2014. "Capacity Utilization, Obsolete Machines and Effective Demand," Centro Sraffa Working Papers CSWP9, Centro di Ricerche e Documentazione "Piero Sraffa".
    2. Alessandro Roncaglia, 2014. "The theory of employment: two approaches compared," PSL Quarterly Review, Economia civile, vol. 67(270), pages 241-268.

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    More about this item

    Keywords

    Growth; Keynesian long-period analysis; capacity utilization; productive-financial capacity;
    All these keywords.

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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