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R&D-based Economic Growth in a Supermultiplier Model

Önder Nomaler, Danilo Spinola () and Bart Verspagen

No 9, CAFE Working Papers from Centre for Applied Finance and Economics (CAFE), Birmingham City Business School, Birmingham City University

Abstract: We investigate how economic growth in a demand-led economy with semi-endogenous productivity growth can be compatible with a stable employment path. Our model uses a Sraffian supermultiplier (SSM), and we endogenize the growth rate of autonomous demand, and semi-endogenize productivity growth. The basic model has a steady state that is consistent with a stable employment rate. Consumption smoothing (between periods of high and low employment) by workers is the mechanism that keeps the growing economy stable. We also introduce a version of the model where the burden for stabilization falls upon government fiscal policy. This also yields a stable growth path, although the parameter restrictions for stability are more demanding in this case.

Keywords: Economic growth model; Sraffian supermultiplier; Research and Development (R&D) (search for similar items in EconPapers)
Date: 2021-01-12
New Economics Papers: this item is included in nep-cwa, nep-gro, nep-ino and nep-mac
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