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A Supermultiplier Stock-Flow Consistent model: the return of the paradoxes of thrift and costs in the long run?

Lidia Brochier () and Antonio Carlos Macedo e Silva

MPRA Paper from University Library of Munich, Germany

Abstract: Supermultiplier models have been recently brought to the post-Keynesian debate. Yet these models still rely on quite simple economic assumptions, being mostly ow models which omit the �nancial determinants of autonomous expenditures. Since the output growth rate converges in the long run to the exogenously given growth rate of \non-capacity creating" autonomous expenditure and the utilization rate moves towards the normal utilization rate, the paradoxes of thrift and costs remain valid only as level e�ects (average growth rates). This paper investigates whether the core conclusions of supermultiplier models hold in a more complex economic framework, described by means of a supermultiplier SFC model, in which private business investment is assumed to be completely induced by income while the autonomous expenditure component - in this case consumption out of wealth - becomes endogenous. The results of the numerical simulation experiments suggest that the paradox of thrift can remain valid in terms of growth e�ects and that a lower pro�t share can also be associated to a higher accumulation rate, though with a lower pro�t rate.

Keywords: Supermultiplier; SFC model; autonomous expenditures; paradoxes of thrift and costs; growth theories. (search for similar items in EconPapers)
JEL-codes: B59 E11 E12 E25 O41 (search for similar items in EconPapers)
Date: 2017-03-21
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Forthcoming in Cambridge Journal of Economics Advanced Access (2018): pp. 1-30

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