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Long-run Effective Demand in the US Economy: An Empirical Test of the Sraffian Supermultiplier Model

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  • Daniele Girardi
  • Riccardo Pariboni

Abstract

The Sraffian supermultiplier is a model of demand-led growth that stresses the importance of the autonomous components of aggregate demand (exports, public spending and autonomous consumption). This article tests empirically some major implications of the model employing macroeconomic data for the United States. In particular, we study the long-run relation between autonomous demand and output through cointegration analysis. The results suggest that autonomous demand and output are cointegrated and that autonomous demand exerts a long-run effect on output. There is also some evidence of simultaneous causality, especially in the short-run. Movements in autonomous demand and in the investment share are also found to be positively related, with Granger-causality going from Z to I/Y.

Suggested Citation

  • Daniele Girardi & Riccardo Pariboni, 2016. "Long-run Effective Demand in the US Economy: An Empirical Test of the Sraffian Supermultiplier Model," Review of Political Economy, Taylor & Francis Journals, vol. 28(4), pages 523-544, October.
    • Handle: RePEc:taf:revpoe:v:28:y:2016:i:4:p:523-544
    DOI: 10.1080/09538259.2016.1209893
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    References listed on IDEAS

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    1. Antonella Stirati, 1994. "THE THEORY OF WAGES IN CLASSICAL ECONOmiCS," Books, Edward Elgar Publishing, number 417.
    2. Fabio Petri, 2004. "General Equilibrium, Capital and Macroeconomics," Books, Edward Elgar Publishing, number 3438.
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