Aggregate Demand, Aggregate Supply and Economic Growth

Amitava Dutt

International Review of Applied Economics, 2006, vol. 20, issue 3, 319-336

Abstract: While mainstream growth theory in its neoclassical and new growth theory incarnations has no place for aggregate demand, Keynesian growth models in which aggregate demand determines growth neglect the role of aggregate supply. By assuming that the rate of technological change responds to labour market conditions, this paper develops a simple and conventional growth model that integrates the roles of aggregate demand and aggregate supply. The model shows how the long-run equilibrium growth rate of the economy, at which the unemployment rate is constant, can be affected by aggregate demand.

Keywords: Growth; aggregate demand; aggregate supply; technological change; Keynesian growth models; hysteresis (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (104)

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DOI: 10.1080/02692170600736094

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