Key ideas and messages from the SM model

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Chapter 11 in The Supermultiplier, 2023, pp 187-197 from Edward Elgar Publishing

Abstract: The supermultiplier (SM) is a compact multiplier-acceleration model which combines induced consumption and induced investment in a single ratio. “The multiplicand”, i.e., the vector of proper autonomous demand is shorter that the Keynesian autonomous demand since it does not contain expansionary induced investment. It can be presented in different ways. The first ratio shows the dragging effects on consumption and investment associated to the production for autonomous demand. The last one shows the income-set-aside, the collection of means of payment to purchase autonomous demand. In this sense, we can build different multipliers for the individual that purchase a luxury car with his monthly savings, the household that buys a house with a mortgage loan, the government that collects taxes to pay for public expenditure and the nation that uses exports to pay for imports. Our SM model has been enriched by different post-Keynesian growth models and has contributed with some nuances.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2023
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