The instability principle revisited: an essay in Harrodian dynamics

Bruno, Olivier; Legrand, Muriel Dal-Pont

doi:10.1080/09672567.2012.683023

Cited by 13 publications

(8 citation statements)

References 26 publications

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“…In fact, in line with Harrod's own comments, the model(Bruno and Dal Pont Legrand 2014) shows that different types of dynamics patterns, including cyclical convergence to the steady state, growth cycle and corridor of stability can emerge.14 Note that at that time, many economists interpreted Harrodian instability very 'negatively' and were always keen to dampen it (cf. Bruno and Dal Pont Legrand 2014: 467-468).15 He found the razor edge interpretation unpalatable; it was spread not only by neoclassical economists but also by Joan Robinson.…”

supporting

confidence: 57%

“…There are already papers which have contributed to remove a few misunderstandings that may have otherwise subsisted. Besomi (2000) demonstrates that Harrod's initial project was to model business cycles not economic growth 6 while Bruno and Dal Pont Legrand (2014) show that the possibility of cyclical growth is supported by the arguments developed by Harrod in 1939. Hoover andHalsmayer (2016) examine how a "culture of misunderstanding" guided Solow's reading of Harrod and his (Solow's) own modeling strategy.…”

Section: Introductionmentioning

confidence: 95%

“…Bruno and Dal Pont Legrand 2014: 467-468).15 He found the razor edge interpretation unpalatable; it was spread not only by neoclassical economists but also by Joan Robinson. Harrod never ceased to contest this interpretation, and in 1973, when he published his Economic Dynamics, he referred to the corridor concept proposed that same year by Axel Leijonhufvud in an article on effective demand failures, as being more appropriate Bruno and Dal Pont Legrand (2014). follow this line of research and show that Harrod's dynamics was indeed compatible with the corridor concept in the context of growth cycles dynamics.…”

mentioning

confidence: 99%

“…Cf Bruno and Dal Pont Legrand (2014)Boianovsky and Hoover (2009) quote a letter fromSolow to Ernst Helmstädter, dated February 11, 1966, from the Duke University Rare Book, Manuscript and Special Collections Library, Durham, N.C.…”

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confidence: 99%

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Growth Without Expectations: The Original Sin of Neoclassical Growth Models

Assous

Legrand

2020

Springer Studies in the History of Economic Thought

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Les opinions exprimées dans la série des Documents de travail GREDEG sont celles des auteurs et ne reflèlent pas nécessairement celles de l'institution. Les documents n'ont pas été soumis à un rapport formel et sont donc inclus dans cette série pour obtenir des commentaires et encourager la discussion. Les droits sur les documents appartiennent aux auteurs. The views expressed in the GREDEG Working Paper Series are those of the author(s) and do not necessarily reflect those of the institution. The Working Papers have not undergone formal review and approval. Such papers are included in this series to elicit feedback and to encourage debate. Copyright belongs to the author(s).

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confidence: 57%

Section: Introductionmentioning

confidence: 95%

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confidence: 99%

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confidence: 99%

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Growth Without Expectations: The Original Sin of Neoclassical Growth Models

Assous

Legrand

2020

Springer Studies in the History of Economic Thought

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“…Y Y must be considered as the firms' expectations of the growth rate of aggregate consumption. Entrepreneurs' expectations about the evolution of consumption must be exogenous, or, at least, cannot be mechanically linked to the evolution of effective output, otherwise Harrodian dynamic instability appears (for recent states of the art on Harrodian instability, see [6][7][8][9]). (Dejuán 2005(Dejuán , 2017 [10,11], following [12], emphasize that the expected rate of growth of permanent aggregate demand is the variable that guides investment and, therefore, is the key variable in a multiplier-accelerator system.…”

Section: Introduction: Underinvestment and Underconsumption In The Gementioning

confidence: 99%

Investment Sustained by Consumption: A Linear and Nonlinear Time Series Analysis

Pérez-Montiel¹,

Erbina²

2019

Sustainability

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This paper studies the dynamic relationship between consumption and investment in the United States between 1947 and 2018. Our findings support the postulates of Keynesian economics-while they are contrary to the theoretic background on which the numerous empirical studies on the saving-investment nexus are based. We find a long-run nexus between consumption and investment, and positive linear Granger-causality running unidirectionally from consumption to investment. Therefore, investment is sustained by consumption. Further, we find that the variables have nonlinear structures and, thus, we apply nonlinear causality tests. We provide evidence of nonlinear causality running unidirectionally from consumption to investment. Nevertheless, after controlling for Government Expenditure, this nonlinear causal relationship disappears, indicating that Government Expenditure drives the nonlinear causal relationship between private consumption and investment. We argue that this finding is consistent with the notion that investment decisions are guided by permanent aggregate demand, because public expenditure allows private consumption to have a sufficiently permanent trajectory to be considered as a guide for investment decisions. Our results do not support the austerity and deflation measures implemented in the last years (especially in the European Union). On the other hand, our findings call for the incentive of final public expenditure, since it favours the long-run link between the private decisions to consume and invest.

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Combining Short-Run and Long-Run Analysis: Some Historical Perspectives

Bridel

Legrand

2016

J Hist Econ Thought

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The interaction between short-run and long-run adjustments has always been a question of fundamental importance for economics. This question has been raised by different authors who were considered as pioneers of political economy. In recent history of macroeconomics (i.e., after the Second World War), Roy Harrod's 1939 contribution has played an important role, setting the agenda for both growth and cycles theory for at least two decades (see, for instance, Assous 2016, or Bruno and Dal Pont Legrand 2014, or Hagemann 2009). If economists never totally ceased to be interested in this question, the combination between short-run and long-run economic analyses still represents a theoretical challenge. Understanding how both dynamics intertwine is not only fundamental for growth theory (cf. Solow 1988) but also for a better understanding of large fluctuations (i.e., deep and durable downturns, as emphasized by Stiglitz 2016). Indeed, economists know all too well that one of the major routes to understanding economic instability (and, indeed, large depressions) is rooted in the short-run/long-run interaction, and more precisely in growth cycles dynamics. Considering the renewed interest macroeconomists have shown for growth cycles analysis-and more generally for theories that account for short-run/long-run interactions-a small group of European historians of economic thought put together a workshop on this topic. The purpose of this scientific meeting (which took place in June 2014, generously financed by the Treilles Foundation) was to associate historians of economic thought with macroeconomists at the frontier of their discipline. Our small group of historians of macroeconomics could thus confront more systematically historical insights on the emergence, development, successes, and failures of earlier attempts with current macroeconomic objectives and challenges. In particular, this workshop helped towards a better understanding of the progressive evolution of the

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The instability principle revisited: an essay in Harrodian dynamics

Cited by 13 publications

References 26 publications

Growth Without Expectations: The Original Sin of Neoclassical Growth Models

Growth Without Expectations: The Original Sin of Neoclassical Growth Models

Investment Sustained by Consumption: A Linear and Nonlinear Time Series Analysis

Combining Short-Run and Long-Run Analysis: Some Historical Perspectives

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