Long-Run Positions and Short-Run Dynamics in a Classical Growth Model

Olivier Bruno

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Abstract: The aim of this paper is to study the qualitative impact of short-run disequilibria on long-run positions. In this perspective, we refer to a classical framework. We underline that one sector classical growth models only deal with perfectly adjusted situations (steady-state equilibria). Such models assume that short-run dynamics are neutral in the long run which means that the steady-state is defined independently of the transient dynamics. In order to show that this situation is not always realised, we propose a modified version of H.D. Kurz's growth model (1990a) that integrates short-run disequilibria. We obtain a dynamics that exhibits a multiplicity of equilibria. Therefore, short-run events can no longer be neglected, since they contribute to the emergence of the long-run equilibrium.

Keywords: Classical dynamics; hysteresis; transitional dynamics (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (3)

Published in Metroeconomica, 1999, 50 (1), pp.119-137

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Journal Article: Long-run Positions and Short-run Dynamics in a Classical Growth Model (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00493854

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