How Short is the Short Run in the Neo-Kaleckian Growth Model?

Ettore Gallo

No 2117, Working Papers from New School for Social Research, Department of Economics

Abstract: The paper provides an analytical solution to the differential equation that regulates the motion of the neo-Kaleckian model in the short run. After presenting a simple open economy neo-Kaleckian model with government activity, the paper analytically derives an expression for the time of adjustment, defined as the time required for the system to make a k-percent adjustment from one steady-state to another. The solution shows that there is an inverse relationship between the strength of the Keynesian stability condition and the the time of adjustment. Last, the model is calibrated for the US, showing that vicinity of the new equilibrium is reached after a period of about 4 quarters. By formally analyzing the out-of-equilibrium trajectory of the neo-Kaleckian model, this contribution moves away from the method of comparative dynamics and provides a historical-time representation of the model's traverse.

Keywords: Neo-Kaleckian Model; time; adjustment period; traverse; effective demand; growth; distribution (search for similar items in EconPapers)
Pages: 21 pages
Date: 2021-10
New Economics Papers: this item is included in nep-cwa, nep-hme, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://www.economicpolicyresearch.org/econ/2021/NSSR_WP_172021.pdf First version, 2021 (application/pdf)

Related works:
Journal Article: How Short Is the Short Run in the Neo-Kaleckian Growth Model? (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:new:wpaper:2117

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