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In a neo-Kaleckian growth-model, we endogenize the dividend rate and corporate debt in the long run and investigate the possibility of multiple equilibria and instability in the economy. We find that the economy is in a wage-led demand and debt-burdened growth regime.However, both debt-led and debt-burdened demand regimes are possible. In some instances, the speed of the adjustment parameter related to the dividend dynamics plays a crucial role in stabilizing the economy.Otherwise, the economy may lose its stability and gives birth to limit cycles. A rise in the floor level of the targeted dividend-capital ratio has a destabilizing effect on the economy. The same is true for a rise in the interest rate. Moreover, a significant rise in the interest rate may cause instability in the economy. Therefore, a lower value of the floor level of the targeted dividend-capital ratio and a lower level of interest rate are desirable for promoting stability in the economy.

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Motivated by the prevailing severe situation in India, we extend the SIR(S) model of infectious diseases to incorporate demand dynamics and its interaction with COVID‐19 spread. We argue that, on one hand, the spread of COVID‐19 creates panic among consumers and firms and negatively affects economic activity. On the other hand, economic activity intensifies the spread of the infection. Initially assuming that recovered individuals do not develop antibodies and become susceptible again, we capture the interaction between economic activity and the spread of the disease in a two‐dimensional dynamical system. We show that a large fiscal expansion combined with measures to boost community health and improve the health sector's capacity to provide critical care can simultaneously improve the economy and control the spread of the disease. Finally, assuming that only a fraction of recovered individuals become susceptible to contracting the diseases again, we obtain richer dynamics in a three‐dimensional dynamical system. This paper also highlights the important role of infection rates and the recovery rate in determining the uniqueness and the stability properties of steady state.

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