When is the Long Run? – Historical Time and Adjustment Periods in Demand-led Growth Models

Ettore Gallo

No 2203, Working Papers from New School for Social Research, Department of Economics

Abstract: In recent years, Post-Keynesian models of growth and distribution have substantially shifted their focus from short to long-run analysis. While many authors have focused on the convergence of demand-led growth models to a fully-adjusted equilibrium, relatively little attention has been given to the time required to reach this long-run position. In order to fill the gap, this paper seeks to answer the question of when is the long run in demand-led growth models. By making use of numerical integration, it analyses the time of adjustment from one steady-state to the other in two well-known demand-led growth models: the Sraffian Supermultiplier and the fully-adjusted version of the neo-Kaleckian model. The results show that the adjustment period is generally beyond an economically meaningful time span, suggesting that researchers and policy makers ought to pay more attention to the models’ predictions during the traverse rather than focusing on steady-state positions.

Keywords: Neo-Kaleckian model; Sraffian Supermultiplier; time; adjustment period; traverse; effective demand; growth (search for similar items in EconPapers)
JEL-codes: B41 B51 E11 E12 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2022-02
New Economics Papers: this item is included in nep-hme, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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http://www.economicpolicyresearch.org/econ/2022/NSSR_WP_032022.pdf First version, 2022 (application/pdf)

Related works:
Journal Article: When is the long run?—Historical time and adjustment periods in demand‐led growth models (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:new:wpaper:2203

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