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Cycles and Growth: A Source of Demand-Driven Endogenous Growth

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  • Pierangelo Garegnani
  • Attilio Trezzini

Abstract

This paper moves in a theoretical context in which the level of economic activity is dependent on aggregate demand in both the long and the short period. It shows that given two simple hypotheses, the economy will exhibit a tendency to grow independently of any increase in the average level of ongoing investment (or any other type of 'autonomous' demand) over time. The two hypotheses are (a) that investment oscillates over time and (b) that the community's marginal propensity to consume is lower when income contracts in slumps than when it increases in booms. This points to a source of growth that is as endogenous to the system, as trade cycles are.

Suggested Citation

  • Pierangelo Garegnani & Attilio Trezzini, 2010. "Cycles and Growth: A Source of Demand-Driven Endogenous Growth," Review of Political Economy, Taylor & Francis Journals, vol. 22(1), pages 119-125.
  • Handle: RePEc:taf:revpoe:v:22:y:2010:i:1:p:119-125
    DOI: 10.1080/09538250903392119
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    Cited by:

    1. Esteban Perez Caldentey & Matias Vernengo, 2013. "Wage and Profit-led Growth: The Limits to Neo-Kaleckian Models and a Kaldorian Proposal," Economics Working Paper Archive wp_775, Levy Economics Institute.
    2. Trezzini, Attilio, 2017. "Harrodian Instability: a Misleading Concept," Centro Sraffa Working Papers CSWP24, Centro di Ricerche e Documentazione "Piero Sraffa".
    3. Sergio Cesaratto, 2012. "Neo-Kaleckian and Sraffian controversies on accumulation theory," Department of Economics University of Siena 650, Department of Economics, University of Siena.
    4. Antonella Palumbo & Attilio Trezzini, 2011. "Pierangelo Garegnani: Policy Implications of the Critique of Political Economy," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 4, December.

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