Autonomous demand, Harrodian instability and the supply side

Peter Skott

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: A recent literature introduces autonomous demand as the driver of long-run economic growth and as a stabilizing force that tames Harrodian instability. The argument is unconvincing. The stabilizing effect is modest for plausible parameter values and, more importantly, it is questionable whether any components of aggregate demand can be viewed as autonomous in the long run. By contrast, models that include the supply side (the labor market) and/or economic policy can address Harrodian instability and produce level and growth effects that resemble those derived in the literature on autonomous demand.

Keywords: supermultiplier; Harrodian instability; Kaleckian models (search for similar items in EconPapers)
JEL-codes: E11 E12 O41 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-gro, nep-mac and nep-pke
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Citations: View citations in EconPapers (10)

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Journal Article: Autonomous demand, Harrodian instability and the supply side (2019)
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