Economic growth, business cycles and products variety: exploring the role of demand satiety

Benoit Desmarchelier, Faridah Djellal () and Faïz Gallouj

Journal of Evolutionary Economics, 2017, vol. 27, issue 3, No 5, 503-529

Abstract: Abstract The paper presents a model of economic growth based on a population of heterogeneous and interacting agents. This model succeeds to generate - in a single framework - GDP growth and cycles as well as product life cycles. Contrary to the existing literature, we find that an increasing variety of consumer goods is not a necessary condition for sustaining the economic growth when consumers are subject to satiation. Indeed, intensive creative-destruction - that is an intensive process of sectors births and deaths - appears to be a more powerful growth engine. We also find that changing consumers’ satiety thresholds is likely to affect the nature of the correlation between the cyclical components of macroeconomic time series.

Keywords: Economic growth; Creative destruction; Product variety; Demand satiety; Agent-based modeling (search for similar items in EconPapers)
JEL-codes: E20 E30 L20 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s00191-017-0498-4

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