IDEAS home Printed from https://ideas.repec.org/p/syd/wpaper/2123-7639.html
   My bibliography  Save this paper

Growth, Autonomous Demand and a Joint-Product Treatment of Fixed Capit al

Author

Listed:
  • White, Graham

Abstract

The aim of this paper is to shed light on the idea of demand-led growth and in particular debate of the last two decades on the appropriate direction of non-marginalist growth theory by exploring the relation between growth and autonomous demands in a fixed capital model proper. The paper developes a simplified two sector model producing a pure consumption good and a machine with variable efficiency. A "fixed-price" model is considered whereby relative prices and the real wage are held at their long-period equilibrium levels, so that disequilibrium in the model is limited to quantities. The dynamics of quantities are represented in terms of first order difference equation system in growth rates of demand, investment growth rates, utilization rates and the relative size of the two sectors. While the local stability of the steady state can be considered in terms of the characteristics of the relevant Jacobian for the model in question such analysis is largely inconclusive. Attention is instead focused on the results of dynamic simulation of the model. These latter results, show the dynamics to depend crucially on the assumptions made regarding the formation of producers' expectations about future growth in demand. Most importantly, expectations of future growth which make allowance for dispersion in past growth rates; as well as expectations which are partially dependent on expectations about autonomous demand growth may have a significant stabilizing effect on the growth of the economy.

Suggested Citation

  • White, Graham, 2005. "Growth, Autonomous Demand and a Joint-Product Treatment of Fixed Capit al," Working Papers 8, University of Sydney, School of Economics.
  • Handle: RePEc:syd:wpaper:2123/7639
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/2123/7639
    Download Restriction: no

    References listed on IDEAS

    as
    1. 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.
    2. Eatwell, John, 1983. "The Long-Period Theory of Employment," Cambridge Journal of Economics, Oxford University Press, vol. 7(3-4), pages 269-285, September.
    3. Park, Man-Seop, 1997. "Accumulation, Capacity Utilisation and Distribution," Contributions to Political Economy, Oxford University Press, vol. 16(0), pages 87-101.
    4. 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.
    5. Sergio Cesaratto & Franklin Serrano & Antonella Stirati, 2003. "Technical Change, Effective Demand and Employment," Review of Political Economy, Taylor & Francis Journals, vol. 15(1), pages 33-52.
    6. 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)

    More about this item

    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:2123/7639. 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.