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Long-run convergence in a neo-Kaleckian open-economy model with autonomous export growth

Listed author(s):
  • Won Jun Nah
  • Marc Lavoie

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique, University of Ottawa [Ottawa])

This paper combines a neo-Kaleckian growth and distribution model with a sort of Sraffian supermultiplier mechanism in which autonomous demand is driven by foreign exports. Short-, medium- and long-run equilibria are considered. In the long-run case, the expectations of sales growth governing investment change adaptively, and this, combined with the autonomous growth rate of exports, produces convergence of the actual rate of capacity utilization to its normal rate. It is demonstrated that some aspects of the main Kaleckian results can be preserved not only in the short or medium run but also in the long run, in the sense that both (i) a decrease in the propensity to save, and (ii) a change in income distribution favoring labor, bring about higher average rates of production growth and capital accumulation. However, the impact of a change in the profit share is shown to be subjected to the condition that the responsiveness of the real exchange rate with respect to the profit share has to be bounded from above, confirming that the scope for wage-led demand or wage-led growth can be limited by open-economy considerations, even within the supermultiplier context.

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Paper provided by HAL in its series Post-Print with number hal-01435726.

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Date of creation: 2017
Publication status: Published in Journal of Post Keynesian Economics, Taylor & Francis (Routledge), 2017
Handle: RePEc:hal:journl:hal-01435726
Note: View the original document on HAL open archive server: https://hal-univ-paris13.archives-ouvertes.fr/hal-01435726
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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  1. Olivier Allain, 2015. "Tackling the instability of growth: a Kaleckian-Harrodian model with an autonomous expenditure component," Cambridge Journal of Economics, Oxford University Press, vol. 39(5), pages 1351-1371.
  2. Riccardo Pariboni, 2015. "Autonomous demand and the Marglin-Bhaduri model: a critical note," Department of Economics University of Siena 715, Department of Economics, University of Siena.
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  5. Sergio Cesaratto, 2012. "Neo-Kaleckian and Sraffian controversies on accumulation theory," Department of Economics University of Siena 650, Department of Economics, University of Siena.
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  7. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-348, November.
  8. Serrano, Franklin, 1995. "Long Period Effective Demand and the Sraffian Supermultiplier," Contributions to Political Economy, Oxford University Press, vol. 14(0), pages 67-90.
  9. Jeronim CAPALDO & Alex IZURIETA, 2013. "The imprudence of labour market flexibilization in a fiscally austere world," International Labour Review, International Labour Organization, vol. 152(1), pages 1-26, March.
  10. Olivier Allain, 2013. "Tackling the instability of growth: A Kaleckian model with autonomous demand expenditures," Documents de travail du Centre d'Economie de la Sorbonne 13026, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  11. Sergio Cesaratto, 2015. "Neo-Kaleckian and Sraffian Controversies on the Theory of Accumulation," Review of Political Economy, Taylor & Francis Journals, vol. 27(2), pages 154-182, April.
  12. Blecker, Robert A, 1989. "International Competition, Income Distribution and Economic Growth," Cambridge Journal of Economics, Oxford University Press, vol. 13(3), pages 395-412, September.
  13. Eckhard Hein & Lena Vogel, 2008. "Distribution and growth reconsidered: empirical results for six OECD countries," Cambridge Journal of Economics, Oxford University Press, vol. 32(3), pages 479-511, May.
  14. Pierangelo Garegnani, 2015. "The Problem of Effective Demand in Italian Economic Development: On the Factors that Determine the Volume of Investment," Review of Political Economy, Taylor & Francis Journals, vol. 27(2), pages 111-133, April.
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