A supermultiplier model of the natural rate of growth

Olivier Allain ()

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We propose a supermultiplier model that includes formal and informal wage redistributive devices enabling everyone in the population to satisfy their primary needs. By introducing population growth and technical progress into the model, we show that wage redistribution gives rise to an autonomous consumption component, the growth rate of which corresponds to the natural rate of growth. The three main outcomes of the model are as follows: (a) Harrodian knife-edge instability can be tamed, (b) the long-run rate of growth of the economy converges toward the natural rate of growth, and (c) the rate of employment stabilizes but at a level that can differ from that of full employment.

Keywords: aggregate demand; Harrodian instability; long run; natural rate of growth; supermultiplier model (search for similar items in EconPapers)
Date: 2021-07
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Citations: View citations in EconPapers (8)

Published in Metroeconomica, 2021, 72 (3), pp.612-634. ⟨10.1111/meca.12336⟩

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Related works:
Journal Article: A supermultiplier model of the natural rate of growth (2021)
Working Paper: A supermultiplier model of the natural rate of growth (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:hal-03218410

DOI: 10.1111/meca.12336

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