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A supermultiplier model of the natural rate of growth

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  • Olivier Allain

Abstract

We propose a supermultiplier model that includes formal and informal wage redistributive devices enabling everyone in the population to satisfy their primary needs. By introducing population growth and technical progress into the model, we show that wage redistribution gives rise to an autonomous consumption component, the growth rate of which corresponds to the natural rate of growth. The three main outcomes of the model are as follows: (a) Harrodian knife‐edge instability can be tamed, (b) the long‐run rate of growth of the economy converges toward the natural rate of growth, and (c) the rate of employment stabilizes but at a level that can differ from that of full employment.

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  • Olivier Allain, 2021. "A supermultiplier model of the natural rate of growth," Metroeconomica, Wiley Blackwell, vol. 72(3), pages 612-634, July.
    • Handle: RePEc:bla:metroe:v:72:y:2021:i:3:p:612-634
    DOI: 10.1111/meca.12336
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    Cited by:

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    2. Joana David Avritzer & Lídia Brochier, 2022. "Household credit-financed consumption and the debt service ratio: tackling endogenous autonomous demand in the Supermultiplier model," Working Papers PKWP2219, Post Keynesian Economics Society (PKES).
    3. Jimenez, Valeria, 2023. "Labour market stability in a zero-growth economy," IPE Working Papers 211/2023, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    4. Skott, Peter, 2023. "Endogenous business cycles and economic policy," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 61-82.
    5. Eckhard Hein & Valeria Jimenez, 2022. "The macroeconomic implications of zero growth: a post-Keynesian approach," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 19(1), pages 41-60, April.
    6. Peter Skott & Júlio Fernando Costa Santos & José Luís da Costa Oreiro, 2022. "Supermultipliers, ‘endogenous autonomous demand’ and functional finance," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 220-244, February.
    7. Marcio Santetti, Michalis Nikiforos, Rudiger von Arnim, 2022. "Growth, cycles, and residential investment," Working Paper Series, Department of Economics, University of Utah 2022_04, University of Utah, Department of Economics.
    8. Dvoskin, Ariel & Torchinsky Landau, Matías, 2023. "Income distribution and economic cycles in an open-economy supermultiplier model," Structural Change and Economic Dynamics, Elsevier, vol. 64(C), pages 273-291.
    9. José A. Pérez‐Montiel & Carles Manera, 2022. "Is autonomous demand really autonomous in the United States? An asymmetric frequency‐domain Granger causality approach," Metroeconomica, Wiley Blackwell, vol. 73(1), pages 78-92, February.

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