Demand-led growth with endogenous innovation
Mauro Caminati () and
Serena Sordi ()
Department of Economics University of Siena from Department of Economics, University of Siena
This paper contributes to the recent macro-dynamics literature on demand-led growth, that borrows insights from the idea expressed long ago by J. Hicks (1950) that Harrodian instability may be tamed by a source of autonomous expenditure in the economy. Contrary to the other contributions in this literature, autonomous expenditure is not exogenous, but is driven by a flow of profit-seeking R&D and innovation expenditures, that raise labour productivity through time. If the state of distribution, hence the wage share, is exogenously fixed and constant, the model gives rise to a macro-dynamics in a two dimensional state space, that may converge to, or give rise to limit cycles around, an endogenous growth path. An exogenous rise of the profit share exerts negative e¤ects on long-run growth and employment, showing that growth is wage led.
Keywords: wage-led growth; endogenous autonomous expenditure; labour-saving technological progress: limit cycles (search for similar items in EconPapers)
JEL-codes: E11 E12 O41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gro, nep-ino, nep-mac and nep-pke
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Journal Article: Demand‐led growth with endogenous innovation (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:764
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