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Abstract

We present a model of economic growth that is based on Keynesian ideas (the role of autonomous demand in economic growth) as well as Schumpeterian notions (technological change). Our model fits in the Sraffian supermultiplier (SSM) tradition, and we endogenise the growth rate of autonomous demand, and semi-endogenise productivity growth. The basic model has a steady state that is consistent with a stable employment rate. Consumption smoothing (between periods of high and low employment) by workers is the mechanism that keeps the growing economy stable. We also introduce a version of the model where the burden for stabilisation 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
Place of PublicationMaastricht
PublisherUNU-MERIT
Publication statusPublished - 6 Nov 2020

Publication series

SeriesUNU-MERIT Working Papers
Number049
ISSN1871-9872

JEL classifications

  • e11 - "General Aggregative Models: Marxian; Sraffian; Institutional; Evolutionary"
  • e12 - "General Aggregative Models: Keynes; Keynesian; Post-Keynesian"
  • e62 - Fiscal Policy
  • o31 - Innovation and Invention: Processes and Incentives
  • o33 - "Technological Change: Choices and Consequences; Diffusion Processes"
  • o41 - One, Two, and Multisector Growth Models

Keywords

  • Economic growth model
  • Sraffian supermultiplier
  • Research and Development
  • R&D
  • Keynesian theory
  • Technological change

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