R&D-based economic growth in a supermultiplier model

O. Nomaler, D. Spinola, B. Verspagen*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

3 Citations (Web of Science)

Abstract

We investigate how economic growth in a demand-driven economy with semi-endogenous productivity growth can be compatible with a stable employment path. Our model uses a Sraffian supermultiplier (SSM), and we endogenize the growth rate of autonomous demand, and semi-endogenize productivity growth. The basic model has a steady state that is consistent with a stable employment rate, and in which the growth rate is determined by R&D expenditures. Consumption smoothing (between periods of high and low employment) by workers is the mechanism that ensures that demand keeps up with productivity growth and that the growing economy is stable. We also introduce a version of the model where the burden for stabilization falls upon government fiscal policy. This also yields a stable growth path, although the parameter restrictions for stability are more demanding in this case.
Original languageEnglish
Pages (from-to)1-19
Number of pages19
JournalStructural Change and Economic Dynamics
Volume59
DOIs
Publication statusPublished - 1 Dec 2021

JEL classifications

  • o41 - One, Two, and Multisector Growth Models
  • e11 - "General Aggregative Models: Marxian; Sraffian; Institutional; Evolutionary"
  • e12 - "General Aggregative Models: Keynes; Keynesian; Post-Keynesian"
  • e62 - Fiscal Policy

Keywords

  • Economic growth model
  • Sraffian supermultiplier
  • Research and Development (R&D)
  • DEMAND

Cite this