 An adaptive evolutionary behaviour for the demand-led growth adjustmentLuigi Bonaventura and Maurizio Caserta MPRA Paper from University Library of Munich, Germany Abstract: Investment activity produces effects on two different economic variables. On the one hand, it adds to the existing productive capacity, on the other, it represents a component of demand. What is required for demand may not be required for accumulation, and viceversa. As a consequence different adjustment mechanisms have been put forward in the economic literature to make the two aspects of investment compatible to each other. In all cases, a distinction has been made between the fundamentally macroeconomic nature of the demand aspect, and the fundamentally microeconomic nature of the capacity-augmenting aspect. This paper tries to discuss the foundations of a non-perverse adjustment mechanism based on the internalisation of the demand aspect of investment. The adjustment mechanism discussed earlier is based on investment reacting to positive or negative excess aggregate demand. Once it is shown that a collectively efficient equilibrium can be reached even on an entirely arbitrary basis, one may set out to show that a behaviour which gets selected in a small population can be easily extended to a large one. Keywords: Investment; demand; capacity-aumenting; coordination rule; evolutionary analysis (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:2527 Access Statistics for this paper More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC. |
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