The debate about Sraffian Supermultiplier Model and the future of heterodox growth models

Abstract

<jats:p>ABSTRACT This paper aims to present the recent debate about Sraffian Supermultiplier Model (SSM), that gained notoriety in the academic environment after the controversy between Peter Skott (2016) and Marc Lavoie (2016, 2017) on the specification of the investment function of the Neo-Kaleckian models of income growth and distribution. Lavoie used the SSM model as an attempt to rescue the Neo-Kaleckians models of the devastating criticism made by Peter Skott (2010) regarding the specification of the investment function. In this context, we will not only argue that this rescue operation was not successful, but we will also question the capacity of SSM models to serve as an “alternative closure” for heterodox models of income growth and distribution, due to three fundamental shortcomings of the SSM approach, which are: (i) the hypothesis that the normal degree of utilization of the productive capacity is an exogenous variable, (ii) that investment in capacity expansion is totally endogenous; and (iii) the applicability of this approach out of a closed economy framework. We will also argue that the Kaldorian models of growth, which are one of the theoretical foundations of the so-called Developmentalist Macroeconomics, and stock-flow consistent models (SFC) seem to be much more promising alternatives for the development of heterodox theories of growth and income distribution.</jats:p>

Influence of Underutilization of Production Capacities on the Dynamics of Russian GDP: An Assessment on the Basis of Production Functions

“…For example, M. Nikiforos (2018) believes that one of the fundamental problems of the SSM model approach is that the normal degree of capacity utilization is treated as an exogenous variable. The current debate on the weaknesses and strengths of the applicability of the SSM model confirms the problematic nature of this initial assumption (da Costa Oreiro et al 2020). In particular, it shows that if the economy operates with increasing returns (as we have shown, this is typical for the Russian economy), then the level of capacity utilization becomes an endogenous variable, that is, an increase in aggregate demand will lead to an increase in the level of use of production capacities.…”

Supermultipliers, ‘endogenous autonomous demand’ and functional finance

“…In fact, in the SM models autonomous demand allows utilization to converge to the desired rate precisely because the trajectory of autonomous demand generates changes in the average saving rate. These changes endogenize Harrod's warranted growth and influence investment, thereby reversing the cumulative process by which actual growth rate diverges from the warranted growth rate (Oreiro et al., 2020; Skott, 2019b).…”

Keynes, Sraffa e a tradição de Cambridge: notas sobre a diversidade de paradigmas

“…Ao criticar 10 A convergência do modelo dinâmico de Freitas e Serrano repousa em uma intensidade moderada de resposta do investimento às fl utuações na demanda e ao crescimento de longo prazo dos gastos autônomos, de modo que a propensão a consumir e a "propensão a investir" resultem inferiores à unidade Freitas 2017: 75-76; tal condição de estabilidade estrutural foi originalmente adiantada por Lloyd Metzler (1950)). Em artigo recente, Oreiro, Da Silva e Santos criticam os modelos sraffi anos baseados no princípio do acelerador por tornarem o investimento endógeno, isto é, por assumi-lo sujeito a uma fórmula invariante ligada às condições de oferta, desconsiderando o caráter incerto das expectativas de longo prazo próprio à mensagem de Keynes (Oreiro;Da Silva;Santos, 2020). a noção de taxa de juros natural adiantada pelo economista austríaco em contraposição à taxa puramente monetária, Sraffa esclarece que todas as mercadorias possuiriam uma taxa de juros natural particular i j , a qual dependeria dos seus preços nos mercados à vista (spot) P j s e futuro (forward) P j f (Sraffa, 1932).…”