Tackling the instability of growth: a Kaleckian-Harrodian model with an autonomous expenditure component

Allain, Olivier

doi:10.1093/cje/beu039

“…Finally, more recent models by Allain (2015) and Lavoie (2016a), introducing the notion of an exogenous/autonomous growth rate of a non-capacity creating expenditure component into otherwise Kaleckian distribution and growth models, have shown that main Kaleckian results can be sustained, even if an exogenous and unique normal or target rate of capacity utilisation is assumed. Under weak conditions, in such models Harrodian instability, generated by the deviation of the goods market equilibrium rate of capacity utilisation from the normal or the target rate of utilisation, will be tamed and the economy will converge towards a normal rate of capacity utilisation.…”

Section: Endogenous Rate Of Capacity Utilisation Beyond the Short Run?mentioning

confidence: 99%

Post-Keynesian macroeconomics since the mid 1990s: main developments

Hein

¹

2017

European Journal of Economics and Economic Policies: Intervention

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractIn this paper the main developments in post-Keynesian macroeconomics since the mid1990s will be reviewed. For this purpose the main differences between heterodox economics in general, including post-Keynesian economics, and orthodox economics will be reiterated and an overview over the strands of post-Keynesian economics, their commonalities and developments since the 1930s will be outlined. This will provide the grounds for touching upon three important areas of development and progress of postKeynesian macroeconomics since the mid-1990s: first, the integration of distribution issues and distributional conflict into short-and long-run macroeconomics, both in theoretical and in empirical/applied works; second, the integrated analysis of money, finance and macroeconomics and its application to changing institutional and historical circumstances, like the process of financialisation; and third, the development of full-blown macroeconomic models, providing alternatives to the mainstream 'New Consensus Model' (NCM), and allowing to derive a full macroeconomic policy mix as a more convincing alternative to the one implied and proposed by the mainstream NCM, which has desperately failed in the face of the recent crises.

show abstract

“…The autonomous component of export demand 0 grows exogenously at the rate ̅ . As long as we stick to this exogenous growth component of effective demand within our model, it is helpful to distinguish conceptually between three different successive equilibria, which are the short-run, medium-run and long-run equilibria, as in Allain (2015). In the short run, is constant and hence the effects of the autonomous export growth cannot be considered.…”

Section: Medium-run Dynamicsmentioning

confidence: 99%

“…Over the last few years, there has been a number of theoretical contributions taking up this version of the Keynesian Hypothesis, namely by Fabio Freitas and Serrano himself (2015) as well as Sergio Cesaratto (2015). The role of an exogenous demand component growing at an exogenous rate within an otherwise neo-Kaleckian framework, which will be the approach taken here, is a new field of study that has been first proposed by Olivier Allain (2015), and then by Marc Lavoie (2016), Riccardo Pariboni (2015) and Amitava Dutt (2015).…”

Section: Introductionmentioning

confidence: 98%

See 1 more Smart Citation

Long-run convergence in a neo-Kaleckian open-economy model with autonomous export growth

Nah

¹

,

Lavoie

²

2017

Journal of Post Keynesian Economics

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. only in the short run but also in the long run, in the sense that both (i) a decrease in the propensity to save, and (ii) a change in income distribution favoring labor, bring about higher average rates of production growth and capital accumulation. However, the long-run impact of a change in the profit share is shown to be subjected to the condition that the responsiveness of the real exchange rate with respect to the profit share has to be bounded from above, confirming that the scope for wage-led demand or wage-led growth can be limited by open-economy considerations. Terms of use: Documents in

show abstract

“…Note the following: First, for simplicity we consider a model for business cycle fluctuations and, therefore, assume a deterministic steady growth path in the long run which is assumed to be consistent with the firm's investment behavior when all targets are met, the sum of productivity and population growth as well as the growth rate of government spending (cf. Skott 1989, Duménil and Lévy 1999, Foley and Michl 1999, Lavoie 1996, Shaikh 2009, Taylor 2012, Allain 2015. All growing variables are normalized by this trend.…”

Section: Preliminariesmentioning

confidence: 99%

Estimating Keynesian models of business fluctuations using Bayesian Maximum Likelihood

Schoder¹

2017

Review of Keynesian Economics

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractAn empirical approach to model estimation and evaluation based on Bayesian Maximum Likelihood is introduced to the post-Keynesian literature. To illustrate the method, it is applied to a neo-Kaleckian type of model of Euro Area business cycle fluctuations including endogenous fiscal and monetary policy as well as endogenous wage formation. To evaluate its empirical performance, the marginal likelihood and impulseresponses conditional on the proposed model are contrasted to those conditional on the corresponding Bayesian vector auto-regression models after relaxing the theory-implied cross-coefficient restrictions. The estimated parameter distributions are broadly in line with the empirical literature. Yet, a Bayesian vector auto-regression with loose theoryimplied restrictions on the prior outperforms the neo-Kaleckian model considerably indicating misspecification. Further, a baseline Dynamic Stochastic General Equilibrium model is superior in terms of the marginal likelihood. Comparative impulse-response analysis indicates a failure of the neo-Kaleckian model to satisfyingly capture the fiscal and monetary policy transmission mechanisms. Keywords 162February 2016 Estimating Keynesian models of business fluctuations using Bayesian Maximum Likelihood. * Christian Schoder † January 23, 2016 AbstractAn empirical approach to model estimation and evaluation based on Bayesian Maximum Likelihood is introduced to the post-Keynesian literature. To illustrate the method, it is applied to a neo-Kaleckian type of model of Euro Area business cycle fluctuations including endogenous fiscal and monetary policy as well as endogenous wage formation. To evaluate its empirical performance, the marginal likelihood and impulse-responses conditional on the proposed model are contrasted to those conditional on the corresponding Bayesian vector auto-regression models after relaxing the theory-implied cross-coefficient restrictions. The estimated parameter distributions are broadly in line with the empirical literature. Yet, a Bayesian vector auto-regression with loose theory-implied restrictions on the prior outperforms the neo-Kaleckian model considerably indicating misspecification. Further, a baseline Dynamic Stochastic General Equilibrium model is superior in terms of the marginal likelihood. Comparative impulse-response analysis indicates a failure of the neo-Kaleckian model to satisfyingly capture the fiscal and monetary policy transmis...

show abstract

Tackling the instability of growth: a Kaleckian-Harrodian model with an autonomous expenditure component

Cited by 143 publications

References 31 publications

Post-Keynesian macroeconomics since the mid 1990s: main developments

Post-Keynesian macroeconomics since the mid 1990s: main developments

Long-run convergence in a neo-Kaleckian open-economy model with autonomous export growth

Estimating Keynesian models of business fluctuations using Bayesian Maximum Likelihood

Contact Info

Product

Resources

About