Structural liquidity shortfalls, competition and macroeconomic stability: Conceptual synthesis of economic growth dependencies

Katariina E. M. Vuorinen

No 02/2026, Working Paper Series from Post-Growth Economics Network (PEN)

Abstract: It has been proposed that stagnating and contracting economies experience macroeconomic instability due to so-called "economic growth dependencies". Yet, this concept has remained macroeconomically ambiguous, leaving unclear whether and under what conditions such dependencies may rise, leading to numerous, heterogeneous, and sometimes contradictory proposals for purported economic growth dependency mechanisms. This paper applies a post-Keynesian lens on the question of economic growth dependencies and presents a conceptual synthesis, demonstrating that the diversity, heterogeneity and inconsistencies of economic growth dependencies suggested by literature are only apparent. Stock-flow consistent approach shows that economic growth dependency, sensu stricto, comes down to one clearly definable macroeconomic mechanism: asymmetric monetary circulation where certain agents or sectors experience persistent structural liquidity shortfalls creating pressures for continued expansion of aggregate economic activity. This dynamic, however, results in structurally enforced growth only if the liquidity shortfalls cannot be resolved through redistribution or expansion of monetary supply in a competitive market environment. By using this synthesis, the paper refines conceptual boundaries of economic growth dependency and defines the necessary and sufficient conditions under which such dependency arises, clarifying the terminological debate and laying the foundation for a macroeconomically consistent theory of economic growth dependency. The paper will also demonstrate that different economic traditions (post-Keynesian, neoclassical, and ecological economics) hold differing views on economic growth dependencies due to differing model structures.

Date: 2026
New Economics Papers: this item is included in nep-gro, nep-hme and nep-pke
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