Demographic growth, Harrodian (in)stability and the supermultiplier

Allain, Olivier

doi:10.1093/cje/bex082

Cited by 26 publications

(32 citation statements)

References 25 publications

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“…Simulations show that the demand dynamics are cyclical out of steady state with cycles that may be stable or unstable, as in Allain (2015Allain ( , 2017. The effect of parameters on simulated stability is intuitive (and confirmed by the Jacobian matrix for the linearized model).…”

Section: Dynamic Stabilitymentioning

confidence: 74%

“…Demand growth can lead supply growth, but only within limits. 22 Equations 7 and 8 provide insights into how our model can address the classic "reconciliation problem" posed first by Harrod (1939;also see Setterfield, 2003;Sawyer, 2012;and Allain, 2017) in which the steady-state growth rate of supply (Harrod's "natural rate") need not equal the steady-state 21 We discuss dynamic stability in the next section for the full system. But there is intuition for why supply growth would converge to demand growth.…”

Section: Demand-led Growth Of Supply In Steady Statementioning

confidence: 99%

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Demand-led growth and accommodating supply

Fazzari

Ferri

Variato

2020

Cambridge Journal of Economics

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We model of demand-led growth with endogenous adjustment of labour supply and productivity, an approach that reconciles Harrod’s warranted rate of demand growth with supply. The model delivers a range of growth paths and unemployment rates rather than a single ‘natural rate’. Theoretically, the steady-state growth path may be dynamically stable or unstable, but empirical calibration favours stability. We show analytically that if demand dynamics are stable, supply will converge to the demand-determined growth path. While a minimum unemployment rate ultimately imposes a supply constraint on growth, empirical results show that a wide range of growth rates are feasible across different demand regimes. The results explain how economies can become trapped with low growth due to weak demand or fiscal austerity and suggest policy responses to stagnant demand.

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Section: Dynamic Stabilitymentioning

confidence: 74%

Section: Demand-led Growth Of Supply In Steady Statementioning

confidence: 99%

Demand-led growth and accommodating supply

Fazzari

Ferri

Variato

2020

Cambridge Journal of Economics

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“… See among others, Serrano (), De‐Juán (), Serrano and Freitas (, ), Allain (, ), Cesaratto (), Dutt (), Girardi and Pariboni (), Pariboni (), and Lavoie (). Other contributions, including Hein (), explore the implications of autonomous demand in models without Harrodian instability.…”

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confidence: 99%

Autonomous demand, Harrodian instability and the supply side

Skøtt

2017

Metroeconomica

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A recent literature introduces autonomous demand as the driver of long-run economic growth and as a stabilizing force that tames Harrodian instability. The argument is unconvincing. The stabilizing e §ect is modest for plausible parameter values and, more importantly, it is questionable whether any components of aggregate demand can be viewed as autonomous in the long run. By contrast, models that include the supply side (the labor market) and/or economic policy can address Harrodian instability and produce level and growth e §ects that resemble those derived in the literature on autonomous demand. JEL numbers: E11, E12, O41

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“…andBhaduri (2008) induce labor market in the neo-Kaleckian model and discuss the stability condition Rowthorn (1977). andCassetti (2003) construct models of the inflation conflict theory where the mark-up ratio depends on not only the target mark-up ratio set by firms but also that set by labor.4 Skott (2010) andHein et al (2012) discuss the topics.5 Franke (2018Franke ( , 2019 discusses the effect of monetary policy, and Roge (2018) considers the effect of firms' pricing policies on the stability condition Allain (2015Allain ( , 2019. andFazzari et al (2013) also discuss the effect of autonomous demand on the stability condition.…”

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confidence: 99%

Capital-labor conflict in the Harrodian model

Ohno

2021

Evolut Inst Econ Rev

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This study aims to consider the effect of capital-labor conflict in the Harrodian model. For this purpose, we incorporate a Bhaduri–Marglin-type investment function, reserve army effect, and technological change in the Harrodian model. Using this model, we find that not only both the reserve army effect and a Bhaduri–Marglin-type investment function but also technological change are needed for a stable Harrodian model. Second, the degree of technological change must lie within a specific range for the model to be stable.

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Demographic growth, Harrodian (in)stability and the supermultiplier

Cited by 26 publications

References 25 publications

Demand-led growth and accommodating supply

Demand-led growth and accommodating supply

Autonomous demand, Harrodian instability and the supply side

Capital-labor conflict in the Harrodian model

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