The economics of the super-multiplier

Thomas Palley

No 33-2018, FMM Working Paper from IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute

Abstract: This paper links the super-multiplier to Keynesian macroeconomics, showing it to be the most Keynesian of growth perspectives. Next, the paper shows that the super-multiplier is a micro-economically coherent theory of investment and capital accumulation. Firms' decisions regarding capital accumulation coordinate demand and supply growth in goods markets. The paper then explores the implications of incorporating the super-multiplier in the Neo-Kaleckian and Cambridge growth models. Lastly, it shows how labor markets and unemployment can be added into super-multiplier models to provide a comprehensive growth model that addresses Solow's (1956) labor market knife-edge problem. Incorporating labor markets does not change the fundamental super-multiplier result that growth is determined by the growth of autonomous demand.

Keywords: Super-multiplier; growth; unemployment; endogenous technical progress; Solow Knife-edge; Hicks; Kaldor (search for similar items in EconPapers)
JEL-codes: E12 O33 O4 O41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2018
New Economics Papers: this item is included in nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:imk:fmmpap:33-2018

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