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Adjusting Theory to Reality: The Role of Aggregate Demand in Kaldor's Late Contributions on Economic Growth


  • Antonella Palumbo


This paper deals with the analysis of growth and development Nicholas Kaldor formulated in the later part of his career, during the 1970s and 1980s. Kaldor's passage from a resource-constrained to a demand-driven conception of growth was closely connected to his persistent effort to make economic theory more realistic and relevant, and led him to a complex vision of the growth process, with historical and institutional factors playing a fundamental role. However, the particular formulation in which Kaldor expressed his ideas about the strategic role of exports in the growth process, namely the long-period foreign trade multiplier, cannot fully capture the main characterisitcs of his vision of the growth process, and is in some respects contradictory with that vision. A critical role is played by Kaldor's conception of the determinants of investment, which, as in his full-employment growth models, he treats as entirely induced by output growth, and hence as not posing limits, in normal conditions, on output expansion.

Suggested Citation

  • Antonella Palumbo, 2009. "Adjusting Theory to Reality: The Role of Aggregate Demand in Kaldor's Late Contributions on Economic Growth," Review of Political Economy, Taylor & Francis Journals, vol. 21(3), pages 341-368.
  • Handle: RePEc:taf:revpoe:v:21:y:2009:i:3:p:341-368
    DOI: 10.1080/09538250903073362

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    Cited by:

    1. Sergio Parrinello, 2014. "A search for distinctive features of demand-led growth models," PSL Quarterly Review, Economia civile, vol. 67(270), pages 309-342.
    2. Mark Setterfield, 2013. "Exploring the supply side of Kaldorian growth models," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(1), pages 22-36, January.
    3. Franklin Serrano & Fabio Freitas, 2016. "The Sraffian Supermultiplier As An Alternative Closure To Heterodox Growth Theory," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 107, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    4. Ahmad A. Borazan, 2015. "On the Way to the Great Depression, The Demand Regime of the US Economy (1900-1929)," Working Paper Series, Department of Economics, University of Utah 2015_02, University of Utah, Department of Economics.
    5. Annamaria Simonazzi & Andrea Ginzburg & Gianluigi Nocella, 2013. "Economic relations between Germany and southern Europe," Cambridge Journal of Economics, Oxford University Press, vol. 37(3), pages 653-675.
    6. Mark Setterfield, 2014. "Economic Growth and Development," Working Papers 1404, Trinity College, Department of Economics.

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