Semi-autonomous household expenditures as the causa causans of postwar US business cycles: the stability and instability of Luxemburg-type external markets

This paper contributes to the recent macro-dynamics literature on demand-led growth, drawing upon the seminal idea that the implications of Harrodian instability may be tamed by a source of autonomous expenditure in the economy.Contrary to the other contributions in this literature, real autonomous expenditure is not growing at an exogenously given rate, and partly consists of a flow of profit-seeking R&D and innovation expenditures raising labour productivity through time. If the state of distribution, hence the wage share, is exogenously fixed and constant, the model gives rise to dynamics in a two dimensional state space, that may converge to, or give rise to a limit cycle around, an endogenous growth path. An exogenous rise of the profit share exerts negative effects on long-run growth and employment, showing that growth is wage led.

Section: Relation With the Literaturementioning

confidence: 67%

Demand‐led growth with endogenous innovation

Caminati

Sordi

2019

“…Banks are financing part of these household autonomous expenditures through mortgage loans and consumer credit, as argued already in Lavoie (2016) and many other authors. Fiebiger (2018) and Fiebiger and Lavoie (in press) look at this in much greater detail, so there is no need to repeat their arguments here. Sufficient is to say that they show that US residential investment fluctuates much more than business investment.…”

Section: Keyn Es I An Un Cer Tai Nty and L Iq Ui Di Tymentioning

confidence: 94%

“…Fiebiger () and Fiebiger and Lavoie () look at this in much greater detail, so there is no need to repeat their arguments here. Sufficient is to say that they show that US residential investment fluctuates much more than business investment.…”

Section: Keynesian Uncertainty and Liquiditymentioning

confidence: 96%

“…One can thus argue that making business investment an induced variable does not necessarily remove the important role played by Keynesian uncertainty and animal spirits. Besides residential investment and expenditures on semidurable goods financed by consumer credit, or what Fiebiger () calls semiautonomous expenditures, animal spirits may also be reflected in the value taken by a flexible accelerator or the coefficient of the investment reaction function.…”

Section: Keynesian Uncertainty and Liquiditymentioning

confidence: 99%

See 1 more Smart Citation

Inconsistencies in the note of Dávila‐Fernández, Oreiro and Punzo

Lavoie

2018

This rejoinder is a rebuttal of the claims made by Dávila‐Fernández, Oreiro, and Punzo (in press) in their comment on Lavoie (). All three points that they make are mistaken: I did not pretend that the introduction of autonomous noncapacity expenditures would on its own allow the neo‐Kaleckian growth model to converge toward the normal rate of capacity utilization; the ‘Keynesian’ message is not eliminated when investment expenditures are essentially induced in a neo‐Kaleckian model; and the equations that they provide to endogenize the normal rate of capacity utilization are meaningless.

“…As shown by Allain (2015) and Lavoie (2016), the basic insights of the Sraffian Supermultiplier model can be produced by modifying some key assumptions of the canonical Neo-Kaleckian model. See also Nah and Lavoie (2017), Fiebiger (2017) and Fiebiger and Lavoie (2017).…”

Section: Further Problems Related To the Existence Of Autonomous Dementioning

confidence: 99%

Normal utilization as the adjusting variable in Neo‐Kaleckian growth models: A critique

Girardi

Pariboni

2018

As well‐known, the canonical Neo‐Kaleckian growth model fails to reconcile actual and normal rates of utilization in equilibrium. Some recent contributions revive an old proposal for solving this problem—making the normal rate of utilization an endogenous variable that converges to the actual utilization rate—justifying it with new, micro‐founded premises. We argue that these new justifications for the convergence of normal to actual utilization do not stand closer scrutiny. First, the proposed microeconomic model relies on various restrictive assumptions, some of which are mutually inconsistent. Second, the derivation of the macroeconomic adjustment mechanism from the microeconomic analysis involves a logical leap that can be justified only by a very arbitrary assumption with little economic justification. Finally, we discuss the way in which this mechanism has been incorporated into the Neo‐Kaleckian growth model by proposers of this approach. We show that, even if one puts aside, for the sake of argument, the first two points, the existence of autonomous components of demand is sufficient to invalidate the resulting macroeconomic model.