IDEAS home Printed from https://ideas.repec.org/p/syd/wpaper/2123-7214.html
   My bibliography  Save this paper

Demand-Led Growth Theory: An Historical Approach

Author

Listed:
  • Smith, Matthew

Abstract

This paper develops upon the Keynesian theory of demand-led growth in order to provide an analytical framework conducive to explaining economic growth and development in concrete terms consistent with the fundamental idea that growth in output and employment is determined by the growth in aggregate demand. The framework employs an historical approach to identify the main factors and their role in explaining demand-led growth and the accumulation process. The theoretical model developed abandons steady-state conditions by proposing that capacity utilization varies in the long run as well as in the short run to ensure output has the elasticity to accommodate levels of autonomous demand free of any capacity saving constraint. On the basis of our analytical framework, the paper considers the main factors which explain the growth in aggregate demand: first, by examining the variables that determine the ‘super-multiplier' and what social, institutional and technical conditions can cause its value to change over time; second, by identifying the components of autonomous demand and the main forces explaining their growth; and third, by considering the manner in which technical progress promotes demand-led growth.

Suggested Citation

  • Smith, Matthew, 2011. "Demand-Led Growth Theory: An Historical Approach," Working Papers 2011-02, University of Sydney, School of Economics.
  • Handle: RePEc:syd:wpaper:2123/7214
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/2123/7214
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. R. F. Kahn, 1959. "Exercises In The Analysis Of Growth," Oxford Economic Papers, Oxford University Press, vol. 11(2), pages 143-156.
    2. Antonella Palumbo & Attilio Trezzini, 2003. "Growth without normal capacity utilization," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 10(1), pages 109-135.
    3. Cornwall,John & Cornwall,Wendy, 2001. "Capitalist Development in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521341493, March.
    4. Matthew Smith, 2006. "On Interest And Profit: Thomas Tooke'S Major Legacy To Economics," Contributions to Political Economy, Oxford University Press, vol. 25(1), pages 1-34, August.
    5. Trezzini, Attilio, 1998. "Capacity Utilisation in the Long Run: Some Further Considerations," Contributions to Political Economy, Oxford University Press, vol. 17(0), pages 53-67.
    6. Serrano, Franklin, 1995. "Long Period Effective Demand and the Sraffian Supermultiplier," Contributions to Political Economy, Oxford University Press, vol. 14(0), pages 67-90.
    7. Trezzini, Attilio, 1995. "Capacity Utilisation in the Long Run and the Autonomous Components of Aggregate Demand," Contributions to Political Economy, Oxford University Press, vol. 14(0), pages 33-66.
    8. Pierangelo Garegnani & Antonella Palumbo, 1997. "Accomulation of capital," Departmental Working Papers of Economics - University 'Roma Tre' 0002, Department of Economics - University Roma Tre.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Girardi , Daniele & Pariboni, Riccardo, 2015. "Autonomous demand and economic growth: some empirical evidence," Centro Sraffa Working Papers CSWP13, Centro di Ricerche e Documentazione "Piero Sraffa".
    2. Sergio Cesaratto, 2012. "Neo-Kaleckian and Sraffian controversies on accumulation theory," Department of Economics University of Siena 650, Department of Economics, University of Siena.

    More about this item

    Keywords

    growth theory; Keynesian demand-led growth; classical economics; economic history;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:syd:wpaper:2123/7214. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vanessa Holcombe). General contact details of provider: http://edirc.repec.org/data/deusyau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.