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Long-run Positions and Short-run Dynamics in a Classical Growth Model

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  • Olivier Bruno

Abstract

The aim of this paper is to study the qualitative impact of short-run disequilibria on long-run positions. In this perspective, we refer to a classical framework. We underline that one sector classical growth models only deal with perfectly adjusted situations (steady-state equilibria). Such models assume that short-run dynamics are neutral in the long run which means that the steady-state is defined independently of the transient dynamics. In order to show that this situation is not always realised, we propose a modified version of H.D. Kurz's growth model (1990a) that integrates short-run disequilibria. We obtain a dynamics that exhibits a multiplicity of equilibria. Therefore, short-run events can no longer be neglected, since they contribute to the emergence of the long-run equilibrium.
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  • Olivier Bruno, 1999. "Long-run Positions and Short-run Dynamics in a Classical Growth Model," Metroeconomica, Wiley Blackwell, vol. 50(1), pages 119-137, February.
    • Handle: RePEc:bla:metroe:v:50:y:1999:i:1:p:119-137
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    File URL: http://hdl.handle.net/10.1111/1467-999X.00065
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    Cited by:

    1. Marc Lavoie, 2010. "Surveying Short-run and Long-run Stability Issues with the Kaleckian Model of Growth," Chapters, in: Mark Setterfield (ed.), Handbook of Alternative Theories of Economic Growth, chapter 6, Edward Elgar Publishing.
    2. Botte, Florian & Dallery, Thomas, 2019. "Analyse systématique du modèle de Bhaduri et Marglin à prix flexibles : « Ça dépend de la valeur des paramètres » [Systematic analysis of the Bhaduri-Marglin Model with flexible prices: « It depend," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 26.
    3. Eckhard Hein & Marc Lavoie & Till van Treeck, 2011. "Some instability puzzles in Kaleckian models of growth and distribution: a critical survey," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(3), pages 587-612.
    4. Olivier Allain & Nicolas Canry, 2008. "Growth, Capital Scrapping, and the Rate of Capacity Utilisation," Post-Print hal-00355932, HAL.
    5. Marc Lavoie, 2006. "A Post‐Keynesian Amendment To The New Consensus On Monetary Policy," Metroeconomica, Wiley Blackwell, vol. 57(2), pages 165-192, May.
    6. Giuseppe Fontana & Alfonso Palacio‐Vera, 2007. "Are Long‐Run Price Stability And Short‐Run Output Stabilization All That Monetary Policy Can Aim For?," Metroeconomica, Wiley Blackwell, vol. 58(2), pages 269-298, May.

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