Harrodians and Kaleckians: a suggested reconciliation and synthesis

Mark Setterfield

No 2111, Working Papers from New School for Social Research, Department of Economics

Abstract: The Kaleckian and Harrodian approaches to growth frequently arrive at antagonistic positions with respect to key issues in heterodox macrodynamics, including the treatment of the rate of capacity utilization and the very nature of the long-run growth process. Nevertheless, this paper is devoted to exploring the possibilities for reconciling and even synthesizing these traditions. It does so by directly addressing three key areas of dispute: the Keynesian stability condition; Harrodian instability; and the question as to whether long-run growth is best conceived in terms of a stable steady state or `corridor instability'. It is shown that reconciliation and even synthesis is possible - the latter producing a `corridor within a corridor' conception of the growth process in which the economy switches between Kaleckian and Harrodian dynamics depending on the extent to which the rate of capacity utilization departs from its normal rate.

Keywords: Keynesian stability condition; Harrodian instability; corridor instability; shifting equilibrium; Kaleckian pseudo-instability; normal rate of capacity utilization (search for similar items in EconPapers)
JEL-codes: E11 E12 E22 O41 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2021-06, Revised 2022-01
New Economics Papers: this item is included in nep-gro, nep-hpe, nep-mac and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:new:wpaper:2111

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