Demand Drives Growth All The Way
Lance Taylor (),
Duncan Foley (),
Ozlem Omer () and
No 2016-04, SCEPA working paper series. from Schwartz Center for Economic Policy Analysis (SCEPA), The New School
This paper makes three contributions to the existing literature on economic growth: first, we provide a demand-driven alternative to the conventional supply side Solow-Swan growth model. The modelâ€™s medium run is built around MarxGoodwin cycles of demand and distribution. Second, we introduce wage income of â€œcapitalistâ€ households. The Samuelson-Modigliani steady state â€œdualâ€ to Pasinettiâ€™s cannot be stable when capitalists have positive wages. Finally, we speak to the discussion triggered by Piketty on the stability of wealth concentration and its relation to the profitability of capital. Our demand-driven model of the long run satisfies Kaldorâ€™s stylized facts (the gold standard of growth theory) and generates sustained economic growth with the capitalistsâ€™ share of wealth stabilizing between zero and one. Complications arising from â€œexcessâ€ capital gains and how well the model fits the data are briefly considered.
Keywords: Demand; Growth; Keynes (search for similar items in EconPapers)
JEL-codes: B51 E12 (search for similar items in EconPapers)
Pages: 28 pages
New Economics Papers: this item is included in nep-gro, nep-his, nep-hme, nep-hpe, nep-mac and nep-pke
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Working Paper: Demand Drives Growth all the Way (2018)
Working Paper: Demand Drives Growth all the Way (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:epa:cepawp:2016-04
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