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Degrowth in a neo-Kaleckian model of growth and distribution? A theoretical compatibility and stability analysis

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  • Antoine Monserand

    () (Centre d'Economie de l'Université de Paris Nord (CEPN))

Abstract

Situated at the interface between post-Keynesian and ecological economics, this article investigates the theoretical possibilities for a degrowth transition to take place while preserving macroeconomic stability. More precisely, the objective is to find whether in a neo-Kaleckian model of growth and distribution an equilibrium with a zero or even negative rate of accumulation can coexist with the Keynesian stability condition being verified. Our results are threefold. First, we confirm that adding the rate of depreciation to the canonical model allows for such an equilibrium to exist, but argue in favor of considering animal spirits rather than the depreciation factor as a potential policy variable for the management of the degrowth transition. Second, other elements such as overhead labour, a tax on capital, an autonomous component in consumption expenditures and a budget deficit can all give this result and provide more 'space' for the equilibrium with a negative rate of accumulation. Finally, we use the mechanism of the Sraffian supermultiplier to illustrate that combined political action and adoption of a more ecological mode of living can be the drivers of a stable degrowth transition. After the transition is completed, the stabilisation of aggregate consumption maintains the economy in a stationary state, at an ecologically sustainable level.

Suggested Citation

  • Antoine Monserand, 2019. "Degrowth in a neo-Kaleckian model of growth and distribution? A theoretical compatibility and stability analysis," CEPN Working Papers 2019-01, Centre d'Economie de l'Université de Paris Nord.
  • Handle: RePEc:upn:wpaper:2019-01
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    References listed on IDEAS

    as
    1. Louison Cahen-Fourot & Marc Lavoie, 2016. "Ecological monetary economics: a post-Keynesian critique," Post-Print hal-01343731, HAL.
    2. Rezai, Armon & Taylor, Lance & Mechler, Reinhard, 2013. "Ecological macroeconomics: An application to climate change," Ecological Economics, Elsevier, vol. 85(C), pages 69-76.
    3. Federico Demaria & Francois Schneider & Filka Sekulova & Joan Martinez-Alier, 2013. "What is Degrowth? From an Activist Slogan to a Social Movement," Environmental Values, White Horse Press, vol. 22(2), pages 191-215, April.
    4. 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.
    5. Cahen-Fourot, Louison & Lavoie, Marc, 2016. "Ecological monetary economics: A post-Keynesian critique," Ecological Economics, Elsevier, vol. 126(C), pages 163-168.
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    8. Asjad Naqvi, 2015. "Modeling Growth, Distribution, and the Environment in a Stock-Flow Consistent Framework. WWWforEurope Policy Paper No. 18," WIFO Studies, WIFO, number 57883.
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    More about this item

    Keywords

    Neo-Kaleckian; Degrowth; Transition; Stability; Autonomous consumption; Supermultiplier;

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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