Income distribution and economic cycles in an open-economy supermultiplier model

Ariel Dvoskin and Matías Torchinsky Landau

Structural Change and Economic Dynamics, 2023, vol. 64, issue C, 273-291

Abstract: We build a structuralist supermultiplier model for a small open economy with two sources of autonomous demand, government expenditures and exports. We find that, in the long run, there is a limit for government spending: its growth rate cannot exceed that of exports without generating an external crisis. However, there is a strong role for public policy, since there is nothing that automatically leads the economy to its maximum growth rate compatible with the external constraint to growth.

Keywords: Sraffian supermultiplier; Thirlwall's law; fiscal policy; public debt; income distribution (search for similar items in EconPapers)
JEL-codes: E11 E31 E32 F43 O41 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:64:y:2023:i:c:p:273-291

DOI: 10.1016/j.strueco.2022.12.012

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