The Impossible Quartet in a Demand Led Growth-Supermultiplier Model for a Small Open Economy
José Luís Oreiro () and
Julio Fernando Costa Santos
No PKWP2215, Working Papers from Post Keynesian Economics Society (PKES)
The aim of this paper is to investigate the long run sustainability of a growth path led by multiple non-creating capacity autonomous expenditures in a demand led-supermultiplier model for a small open economy. Using two different models the results show that it is impossible to have in the same model long-term economic growth driven by the non-capacity creating component of domestic demand, exogenous income distribution, long-run balance between productive capacity and aggregate demand and balance of payments equilibrium. Economic viability of the balanced-growth path demands growth to be led by exports, at least for small open economies.
Keywords: Post-Keynesian Economics; Growth and Distribution; Srafian Supermutiplier; Simulation Models (search for similar items in EconPapers)
JEL-codes: E12 E37 P10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gro, nep-mac, nep-opm and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:pke:wpaper:pkwp2215
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