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A supermultiplier model of the natural rate of growth

Author

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  • Olivier Allain

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

Abstract

We propose a supermultiplier model that includes formal and informal wage redistributive devices enabling everyone in the population to satisfy their primary needs. By introducing population growth and technical progress into the model, we show that wage redistribution gives rise to an autonomous consumption component, the growth rate of which corresponds to the natural rate of growth. The three main outcomes of the model are as follows: (a) Harrodian knife-edge instability can be tamed, (b) the long-run rate of growth of the economy converges toward the natural rate of growth, and (c) the rate of employment stabilizes but at a level that can differ from that of full employment.

Suggested Citation

  • Olivier Allain, 2021. "A supermultiplier model of the natural rate of growth," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03218410, HAL.
    • Handle: RePEc:hal:cesptp:hal-03218410
    DOI: 10.1111/meca.12336
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    Cited by:

    1. Jimenez, Valeria, 2023. "Labour market stability in a zero-growth economy," IPE Working Papers 211/2023, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    2. Skott, Peter, 2023. "Endogenous business cycles and economic policy," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 61-82.
    3. Allain, Olivier, 2022. "A supermultiplier model with two non-capacity-generating semi-autonomous demand components," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 91-103.
    4. Marcio Santetti, Michalis Nikiforos, Rudiger von Arnim, 2022. "Growth, cycles, and residential investment," Working Paper Series, Department of Economics, University of Utah 2022_04, University of Utah, Department of Economics.
    5. José A. Pérez‐Montiel & Carles Manera, 2022. "Is autonomous demand really autonomous in the United States? An asymmetric frequency‐domain Granger causality approach," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 78-92, February.
    6. Pérez-Montiel, José A. & Sansó, Andreu, 2025. "Different specifications and implications of the supermultiplier model," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 963-969.
    7. Gallo, Ettore & Zamparelli, Luca, 2025. "Harrodian Instability and Induced Technical Change," MPRA Paper 125533, University Library of Munich, Germany.
    8. Hein, Eckhard, 2025. "Kaleckian economics after Kalecki: A survey," IPE Working Papers 257/2025, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    9. Eckhard Hein & Valeria Jimenez, 2022. "The macroeconomic implications of zero growth: a post-Keynesian approach," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 19(1), pages 41-60, April.
    10. Dvoskin, Ariel & Torchinsky Landau, Matías, 2023. "Income distribution and economic cycles in an open-economy supermultiplier model," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 273-291.
    11. Joana David Avritzer & Lídia Brochier, 2022. "Household credit-financed consumption and the debt service ratio: tackling endogenous autonomous demand in the Supermultiplier model," Working Papers PKWP2219, Post Keynesian Economics Society (PKES).
    12. Peter Skott & Júlio Fernando Costa Santos & José Luís da Costa Oreiro, 2022. "Supermultipliers, ‘endogenous autonomous demand’ and functional finance," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 220-244, February.
    13. Jose A. Pérez‑Montiel & Andreu Sansó & Oguzhan Ozcelebi & Riccardo Pariboni, 2024. "Correction to: Autonomous and induced demand in the United States: A long‑run perspective," Journal of Evolutionary Economics, Springer, vol. 34(4), pages 1019-1020, December.

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