Schumpeter Meeting Keynes: A Policy-Friendly Model of Endogenous Growth and Business Cycles

Giovanni Dosi, Giorgio Fagiolo () and Andrea Roventini

No 50/2008, Working Papers from University of Verona, Department of Economics

Abstract: This paper studies an agent-based model that bridges Keynesian theories of demandgeneration and Schumpeterian theories of technology-fueled economic growth. We employ the model to investigate the properties of macroeconomic dynamics and the impact of public polices on supply, demand and the \fundamentals" of the economy. We find that the complementarities between factors in uencing aggregate demand and drivers of technological change affect both "short-run" fluctuations and long-term growth patterns. From a normative point of view, simulations show a corresponding complementarity between Keynesian and Schumpeterian policies in sustaining long-run growth paths characterized by mild fluctuations and acceptable unemployment levels. The matching or mismatching between innovative exploration of new technologies and the conditions of demand generation appear to suggest the presence of two distinct "regimes" of growth (or absence thereof) characterized by different short-run fluctuations and unemployment levels.

Keywords: Endogenous Growth; Business Cycles; Growth Policies; Business Cycle Policies; Evolutionary Economics; Agent-Based Computational Economics; Post-Walrasian Economics; Empirical Validation; Monte-Carlo Simulations (search for similar items in EconPapers)
JEL-codes: E32 E6 O3 O4 (search for similar items in EconPapers)
Pages: 33
Date: 2008-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Journal Article: Schumpeter meeting Keynes: A policy-friendly model of endogenous growth and business cycles (2010)
Working Paper: Schumpeter Meeting Keynes: A Policy-Friendly Model of Endogenous Growth and Business Cycles (2008)
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