The impossible quartet in a demand led growthsupermultiplier model for a small open economy

José Luis Oreiro () and Julio Fernando Costa Santos ()

Brazilian Journal of Political Economy, 2023, vol. 43, issue 3, 592-618

Abstract: The aim of this paper is to investigate the long run sustainability of a growthpath led by multiple non-creating capacity autonomous expenditures in a demand led-supermultipliermodel for a small open economy. Using two different models the results show thatit is impossible to have in the same model long-term economic growth driven by the non-capacitycreating component of domestic demand, exogenous income distribution, long-run balance between productive capacity and aggregate demand and balance of payments equilibrium.Economic viability of the balanced-growth path demands growth to be led by exports,at least for small open economies. JEL Classification: E12; E37; P10

Keywords: Post-Keynesian economics; growth and distribution; Sraffian supermutiplier; simulation models (search for similar items in EconPapers)
Date: 2023
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