Kalecki’s Long-Run Theory of Effective Demand: The Trend and Business Cycles

Julio G. López and Michaël Assous

Chapter 5 in Michal Kalecki, 2010, pp 91-128 from Palgrave Macmillan

Abstract: Abstract In 1933, when constructing a macrodynamic business-cycle model, Kalecki’s purpose was to explain observed cycles with a macroeconomic theory capable of mathematical expression, leading to a dynamic system whose solutions are endogenous, deterministic cycles of constant amplitude. In substance, the demonstration of the intrinsic instability of capitalist economies was at stake. With this purpose in mind, using a linear mixed difference and differential equation, Kalecki tried to show at the 1933 Leyden meeting of the Econometric Society that this aim had been reached, showing in particular that his system gave rise to a cyclical solution of constant amplitude for a special value of the parameters. But, Alas, Frisch was there to point out that since the Greeks it has been accepted that one can never say an empirical quantity is exactly equal to a precise number. Given his aim, this was a deadly blow to Kalecki […]. (Goodwin 1989, in Sebastiani 1989: 249–250) Owing to the remarks he received, Kalecki afterwards temporarily accepted Frisch’s Swinging System approach whereby the economy has a natural tendency to reach a stationary equilibrium and cycles occur due to exogenous shocks. Pushing momentarily into the background the demonstration of the intrinsic instability of capitalist economies, he thus centred his efforts on the explanation outlined in the conclusion of his 1934 article “Three Systems” (Kalecki 1934a [1990]).

Keywords: Business Cycle; Capital Stock; Investment Decision; National Income; Technical Progress (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:gtechp:978-0-230-29395-3_5

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230293953

DOI: 10.1057/9780230293953_5

Access Statistics for this chapter

More chapters in Great Thinkers in Economics from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().