Autonomous demand, multiple equilibria and unemployment dynamics

Piero Ferri and Fabio Tramontana
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Piero Ferri: University of Bergamo

Journal of Economic Interaction and Coordination, 2022, vol. 17, issue 1, No 11, 209-223

Abstract: Abstract The paper presents a medium-run growth model driven by autonomous demand, where aggregate demand and supply interact and unemployment is present and plays different roles. In particular, it generates a feedback from supply to aggregate demand rooted in the presence of heterogeneous consumers and an uncertain environment. Two are the main consequences of this approach. The first is that multiple equilibria can be generated. The second is that equilibria may have different stability properties. In this perspective, growth becomes a dynamic process where initial conditions matter and history plays an important role.

Keywords: Medium-run growth; Autonomous demand; Endogenous supply; Unemployment; Instability; The reconciliation process; Multiple equilibria; Simulations (search for similar items in EconPapers)
JEL-codes: C63 E12 E32 J2 O40 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11403-020-00306-1

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