Growth, investment share and the stability of the Sraffian Supermultiplier model in the U.S. economy (1985–2017)

Abstract

The Sraffian Supermultiplier demand-led growth model posits that economic growth is led by autonomous expenditures that do not create productive capacity, while private capacity creating investment is supposed to be an induced expenditure. On fully adjusted positions, capacity tends to adjust to demand, and utilization converges to its normal level. For this adjustment to take place, the propensity to invest is required to be endogenously determined, playing the role of the adjusting variable that accommodates different growth rates (Serrano, 1995).

Is autonomous demand really autonomous in the United States? An asymmetric frequency‐domain Granger causality approach

“…This is how Girardi and Pariboni (2016, 2020), Girardi et al. (2020), Haluska et al (2020), Braga (2020), and Perez‐Montiel and Erbina (2020) proceed. For the present empirical research, we follow the existing literature and use the variable .…”

“…On the other hand, to the best of our knowledge, the existing empirical literature on the supermultiplier model (Braga, 2020; Girardi & Pariboni, 2016, 2020; Girardi et al., 2020; Haluska et al., 2020; Perez‐Montiel & Erbina, 2020, among others) does not consider nonlinearities in the dynamic relationship between autonomous demand and output. The aim of our paper is to fill this gap because taking into account nonlinearities is relevant when dealing with macroeconomic time series.…”

Demand-led growth and functional income distribution in Brazil from 1952 to 2017

“…Finally, it is also important to mention the empirical work pursued by the Supermultplier literature. As argued by Haluska et al (2020) they can also be divided into two categories. The fi rst group has focused on testing how well autonomous expenditures can explain the level of output.…”

The Sraffian Supermultiplier and Cycles: Theory and Empirics

“…Empirical investigations of SSM literature are still limited in number. Works such as Girardi and Pariboni (2016), Pérez-Montiel and Erbina (2020), and Haluska, Braga, and Summa (2021) aim to estimate the linkages between autonomous non capacity-generating expenditures and output growth, as well as to estimate the parameters of investment functions connecting supermultiplier effects with long-run growth and distribution. The first and third study apply time-series techniques to the US economy, while the second applies panel data methods to sixteen European countries.…”

“…These models focus on "Granger causality," finding evidence of such linkages from autonomous demand components to investment. Furthermore, Haluska, Braga, and Summa (2021) estimate an SSM investment function that shows a slow speed of adjustment of capacity utilization to converge to its normal level, as well as inertial behavior of the investment share. These results are consonant with SSM predictions.…”