 How Short Is the Short Run in the Neo-Kaleckian Growth Model?Review of Political Economy, 2023, vol. 35, issue 3, 687-701 Abstract: The paper provides an analytical solution to the differential equation that regulates the motion of the neo-Kaleckian model in the short run. After presenting a simple open economy neo-Kaleckian model with government activity, the paper analytically derives an expression for the time of adjustment, defined as the time required for the system to make a k percent adjustment from one steady-state to another. The solution shows that there is an inverse relationship between the time of adjustment and (i) the strength of the Keynesian stability condition; (ii) the behavior of entrepreneurs underlying their decisions to more rapidly/slowly respond to changes in goods market conditions. Last, the model is calibrated for the US, showing that the vicinity of the new equilibrium is reached after a period of about 5 quarters under a baseline calibration. By formally analyzing the out-of-equilibrium trajectory of the neo-Kaleckian model, this contribution moves away from the method of comparative dynamics and provides a historical-time representation of the model's traverse. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:revpoe:v:35:y:2023:i:3:p:687-701 Ordering information: This journal article can be ordered from DOI: 10.1080/09538259.2022.2150436 Access Statistics for this article Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon More articles in Review of Political Economy from Taylor & Francis Journals |
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