Aggregate Demand, Aggregate Supply and Economic Growth

Abstract

While mainstream growth theory in its neoclassical and new growth theory incarnations has no place for aggregate demand, Keynesian growth models in which aggregate demand determines growth neglect the role of aggregate supply. By assuming that the rate of technological change responds to labour market conditions, this paper develops a simple and conventional growth model that integrates the roles of aggregate demand and aggregate supply. The model shows how the long-run equilibrium growth rate of the economy, at which the unemployment rate is constant, can be affected by aggregate demand.Growth, aggregate demand, aggregate supply, technological change, Keynesian growth models, hysteresis,

The middle class in macroeconomics and growth theory: a three-class neo-Kaleckian-Goodwin model

“…This is the labor market balancing mechanism identified by Dutt (2006) and Palley (2012b). Finally, the employment rate impacts wage bill division 7 between middle managers and workers (Palley, 2013a), thereby impacting AD.…”

“…The third strand of research comes from Dutt (2006) and Palley (2012b) who introduce labor markets. In steady state, employment and the labor force must grow at the same rate to ensure a constant unemployment rate.…”

Excesso de incentivos à inovação na presença de consumidores sofisticados: um modelo de progresso tecnológico endógeno com capital humano

“…No entanto, a compreensão do fenômeno do lado da procura, associado à crescente relevância das atividades de consumo na sociedade, tem sido relativamente pouco explorada pela literatura do crescimento endógeno. Vários autores (e.g., Metcalfe, 2001;Dutt, 2006) chamam inclusive a atenção para o fato de as teorias neoclássica e endógena do crescimento econômico negligenciarem a procura agregada.…”

“…1 Na verdade, a teoria ortodoxa do crescimento econômico, quer na sua forma neoclássica inicial (Solow, 1956), quer na nova ou endógena teoria do crescimento (ver Barro e Sala-i-Martin, 1995, para uma survey), negligencia a procura agregada. (Dutt, 2006). Na teoria ortodoxa do crescimento econômico o foco reside tradicionalmente na lógica da acumulação do capital e na influência das diferentes formas de alterações técnicas.…”

Endogenous Growth, Price Stability and Market Disequilibria

“…This is done, for instance, in Palley (1996Palley ( , 2003, Blackburn (1999) and Dutt (2006). These authors begin precisely by highlighting that conventional macroeconomics only look to the interaction of aggregate demand and aggregate supply in the short-run performance of the economy but it neglects the eventual role of demand on the analysis of economic growth: growth is exclusively driven by supply-side factors, like the state of technology.…”