Harrod's Dynamics and the Kaldor-Thirlwall Export-led Growth

Giuseppe Celo () and Mario Sportelli ()
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Giuseppe Celo: Dipartimento di Scienze Economiche UniversitÃÂ di Bari, http://www.dse.uniba.it/Corsi/docenti/Celi/Celi.htm
Mario Sportelli: Dipartimento di Scienze Economiche UniversitÃÂ di Bari, http://www.dse.uniba.it/Corsi/docenti/Sportelli/Mario%20Sportelli.htm
Authors registered in the RePEc Author Service: Giuseppe Celi

No 104, CELPE Discussion Papers from CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy

Abstract: This paper investigates an open economy macrodynamic model on Harrodian lines. The analysis starts with a reconsideration of the post-Keynesian ThirlwallâÂÂs approach to growth in open economy. We cast doubt on the Thirlwall idea aimed at rendering the concept of HarrodâÂÂs foreign trade multiplier genuinely consistent with HarrodâÂÂs dynamics. Following a different procedure from ThirwallâÂÂs approach, we start from HarrodâÂÂs dynamics in a closed economy and investigate what happens when the foreign trade is introduced. An important result of our model is that, according to HarrodâÂÂs intuition, there is less cyclical instability in the open economy than in the closed one where chaotic instability prevails. Dynamics in our model exhibits a limit cycle. Finally, the model shows that the possibility of an export-led growth strictly depends on the technical progress dynamics.

Keywords: International trade; Growth; Business fluctuations (search for similar items in EconPapers)
JEL-codes: C62 E12 E32 F10 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2007-10-01
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