A supermultiplier model with two non-capacity-generating semi-autonomous demand components

Olivier Allain ()

Structural Change and Economic Dynamics, 2022, vol. 63, issue C, 91-103

Abstract: According to supermultiplier models, economic dynamics are driven by the dynamics of non-capacity-generating autonomous demand components. Since the literature suggests several candidates for these components (government expenditures, credit-financed consumption, private residential investments, etc.), it is necessary to analyze how two (or more) autonomous components can coexist, which is the purpose of the theoretical model, conceptual discussion and simulation exercises presented herein. Because no more than one component can remain exogenous in the long run, either the other component(s) must adjust endogenously, or all the components adjust to each other. In the latter case, the long-run growth rate becomes path dependent, a new finding in the literature on supermultiplier models. Furthermore, while the label ‘autonomous’ becomes questionable for qualifying demand components, we argue that they should not be considered induced either, leading us to opt for the ‘semi-autonomous’ label suggested by Fiebiger (2018, 2020) and Fiebiger and Lavoie (2019).

Keywords: Autonomous demand; Effective demand; Long run; Path dependency; Supermultiplier (search for similar items in EconPapers)
JEL-codes: E12 E20 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: A supermultiplier model with two non-capacity-generating semi-autonomous demand components (2022)
Working Paper: A supermultiplier model with two non-capacity-generating semi-autonomous demand components (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:63:y:2022:i:c:p:91-103

DOI: 10.1016/j.strueco.2022.09.008

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