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R&D-based economic growth in a supermultiplier model

Önder Nomaler, Danilo Spinola () and Bart Verspagen

Structural Change and Economic Dynamics, 2021, vol. 59, issue C, 1-19

Abstract: We investigate how economic growth in a demand-driven economy with semi-endogenous productivity growth can be compatible with a stable employment path. Our model uses a Sraffian supermultiplier (SSM), and we endogenize the growth rate of autonomous demand, and semi-endogenize productivity growth. The basic model has a steady state that is consistent with a stable employment rate, and in which the growth rate is determined by R&D expenditures. Consumption smoothing (between periods of high and low employment) by workers is the mechanism that ensures that demand keeps up with productivity growth and that the growing economy is stable. We also introduce a version of the model where the burden for stabilization falls upon government fiscal policy. This also yields a stable growth path, although the parameter restrictions for stability are more demanding in this case.

Keywords: Economic growth model; Sraffian supermultiplier; Research and Development (R&D) (search for similar items in EconPapers)
JEL-codes: E11 E12 E62 O41 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:59:y:2021:i:c:p:1-19

DOI: 10.1016/j.strueco.2021.07.002

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Structural Change and Economic Dynamics is currently edited by F. Duchin, H. Hagemann, M. Landesmann, R. Scazzieri, A. Steenge and B. Verspagen

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