Surveying Short-run and Long-run Stability Issues with the Kaleckian Model of Growth (original) (raw)

Expectations and Stability in the Kaleckian Growth Model

SSRN Electronic Journal, 2016

A central element in the canonical Kaleckian growth model is the demand-led output-adjustment stability condition known as the Keynesian stability condition. This condition requires that, all else constant, saving be more responsive to changes in capital capacity utilization than investment. This paper further explores the plausibility of the Keynesian stability condition by enriching the Kaleckian growth model with a more fully developed Keynesian theory of expectations formation. As a result, the responsiveness of investment to changes in capacity utilization is reduced, and through mechanisms that have clear and plausible behavioural underpinnings. It therefore becomes more likely (in principle) that the Keynesian stability condition will hold in practice. The paper also explores the consequences of such re-specification of investment behaviour for certain comparative static results associated with the canonical Kaleckian growth model.

Economic Growth: Theory and numerical solution methods

(ordered by sections) Chapter 2. The neoclassical growth model under a constant savings rate • Solow_deterministic.xls. Section 2.5.3 A single realization for the constant savings rate, deterministic growth model, is analyzed. o Discrete spreadsheet: The solution to the model is computed from the exact solution as well as from linear and quadratic approximations. A numerical comparison between them is performed. o Increasing time path spreadsheet: the case of an economy converging to steady state from below o Decreasing time path spreadsheet: the case of an economy converging to steady state from above • Change_steadystate.m. Section 2.5.3 Characterization of steady-state effects from changes in structural parameters other than the savings rate • Change_savings.xls. Section 2.5.4 Short-and long-run effects of a permanent increase in the value of the savings rate. A large and a small increase in savings rate are considered in different spreadsheets. o C-increases (1) and (2) spreadsheets: it presents the case of an economy where steady-state consumption is higher after the increase in savings. o C-decreases (1) and (2) spreadsheets: it presents the case of an economy where steady-state consumption is lower after the increase in savings • Change_savings.m. Section 2.5.4 It performs the same exercise as Change_savings.xls • Dynamic_inefficiency.xls. Section 2.5.5 Characterization of dynamically efficient and inefficient steady-states • Solow_dynamic.m. Section 2.5.5 The program performs the same exercise as Dynamic_inefficiency.xls. • Solow_stochastic.xls. Section 2.6.1 An approximate and an exact solution to the stochastic version of the constant savings rate economy. Four different realizations are displayed in as many spreadsheets • Solow_stochastic.m. Sections 2.5.3 and 2.6.1

The Post-Keynesian Theories of Growth and Distribution: A Survey

Handbook of Alternative Theories of Economic Growth, 2010

The main idea underlying the post-or neo-Keynesian theories of growth and distribution is that of aggregate savings adjusting to an independently given volume of aggregate investment. The adjustment of savings to investment, rather than the other way round, is seen to be a central, if not the central, message of Keynes's General Theory (cf. Keynes, CW, VII). As Keynes emphasized in the year following the publication of his book, 'the initial novelty' of The General Theory 'lies in my maintaining that it is not the rate of interest, but the level of income which ensures equality between saving and investment' (Keynes, 1937, p. 250). The idea that investment, governed by 'animal spirits', is independent of savings, Nicholas Kaldor (1955-6, p. 95) dubbed the 'Keynesian hypothesis'. The following argument will be largely based on this hypothesis. Since many of the ideas that play an important role in the field of research surveyed in this chapter can be traced back to contributions by Michal Kalecki, one could also speak of a post-Kaleckian theory.The post-Keynesian theories of growth and distribution are essentially an offspring of the principle of the multiplier, developed by Richard Kahn (1931) and then adopted by Keynes (CW, VII, chap. 10). There are essentially two channels by means of which the adjustment of savings to investment can take place. As Kaldor pointed out, the principle of the multiplier can be 'alternatively applied to a determination of the relation between prices and wages, if the level of output is taken as given, or to the determination of the level of employment, if distribution (i.e., the relation between prices and wages) is taken as given' (Kaldor, 1955-6, p. 94). That is to say, in conditions of continually full capital utilization and full employment of labour, the adjustment of savings to investment is evisaged to be effected via prices changing relative to money wages and thus a redistribution of income between wages and profits or classes of income recipients. In conditions of less than full utilization of the capital stock and of the labour force, on the other hand, savings can adjust to investment via a change in the degree of capital utilization and the level of employment, without any marked change in the real wage rate, at least within limits. This case is, however, not restricted View publication stats View publication stats

Growth Models with Exogenous Saving Rates, Unemployment and Wage Inertia

2012

El propòsit d'aquest article és introduir una mercat de treball no competitiu i atur en el model de creixement amb taxes d'estalvi exògenes que es pot trobar en els llibres de text de creixement (Sala-i-Martín, 2000; Barro and Sala-i-Martín, 2003; Romer, 2006). Primer, derivem un marc general amb una funció de producció neoclàssica per analitzar la relació entre creixement i ocupació. Utilitzem aquest marc per estudiar les dinàmiques conjuntes del creixement i l'ocupació sota diferents regles de fixació salarial.

A Pasinetti model of savings and growth

2017

This paper develops a two-sector growth model in which institutional investors play a significant role. A necessary and sufficient condition is established under which these investors own the entire capital stock in the long run. The dependence of the long-run growth rate on the behaviour of such investors, and the effects of a productivity increase are analysed.