Putting Austerity to Bed: Technical Progress, Aggregate Demand and the Supermultiplier

Matteo Deleidi and Mariana Mazzucato

Review of Political Economy, 2019, vol. 31, issue 3, 315-335

Abstract: The paper investigates the determinants of private investment and economic growth from a theoretical perspective. We start with a critical analysis of the crowding-out effect and we present a new version of the Sraffian Supermultiplier: a model that accounts for both the multiplier and accelerator effects. We focus on different types of fiscal policies: generic ones and ‘mission-oriented’ ones that set a new direction for the economy. We show that mission-oriented policies have the potential to generate the largest positive effect on investments and output growth as well as on innovation processes and labour productivity growth.

Date: 2019
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Citations: View citations in EconPapers (39)

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DOI: 10.1080/09538259.2019.1687146

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