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The Sraffian supermultiplier as an alternative closure for heterodox growth theory

Author

Listed:
  • Franklin Serrano

    (Instituto de Economia, Universidade Federal do Rio de Janeiro (UFRJ), Brazil)

  • Fabio Freitas

    (Instituto de Economia, Universidade Federal do Rio de Janeiro (UFRJ), Brazil)

Abstract

This paper aims to show that the Sraffian supermultiplier model provides an alternative closure for the heterodox analysis of economic growth. The new closure follows from the assumption of the existence of autonomous non-capacity-creating expenditures, which implies that the ratio of the average to the marginal propensity to save is an endogenous variable whose determination allows the marginal propensity to invest to determine the saving ratio without the need for changes in income distribution. Provided it is also assumed that capitalist competition leads to gradual changes in the marginal propensity to invest in order to adjust productive capacity to demand, the new closure (in contrast to the Cambridge and neo-Kaleckian closures) allows us to reconcile demand-led growth, exogenous distribution, and a tendency towards normal capacity utilization.

Suggested Citation

  • Franklin Serrano & Fabio Freitas, 2017. "The Sraffian supermultiplier as an alternative closure for heterodox growth theory," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(1), pages 70-91, April.
    • Handle: RePEc:elg:ejeepi:v:14:y:2017:i:1:p70-91
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    Citations

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    Cited by:

    1. Ryan Woodgate & Eckhard Hein & Ricardo Summa, 2023. "Components of autonomous demand growth and financial feedbacks: Implications for growth drivers and growth regime analysis," Working Papers PKWP2307, Post Keynesian Economics Society (PKES).
    2. Campana, Juan Manuel & Emboava Vaz, João & Hein, Eckhard & Jungmann, Benjamin, 2022. "Demand and growth regimes of the BRICs countries," IPE Working Papers 197/2022, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    3. Ettore Gallo & Maria Cristina Barbieri Góes, 2023. "Investment, autonomous demand and long-run capacity utilization: an empirical test for the Euro Area," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 225-255, April.
    4. Ettore Gallo, 2022. "When is the long run?—Historical time and adjustment periods in demand‐led growth models," Metroeconomica, Wiley Blackwell, vol. 73(4), pages 1155-1178, November.
    5. Santiago José Gahn & Alejandro González, 2022. "On the empirical content of the convergence debate: Cross‐country evidence on growth and capacity utilisation," Metroeconomica, Wiley Blackwell, vol. 73(3), pages 825-855, July.
    6. Eckhard Hein & Ryan Woodgate, 2021. "Stability issues in Kaleckian models driven by autonomous demand growth—Harrodian instability and debt dynamics," Metroeconomica, Wiley Blackwell, vol. 72(2), pages 388-404, May.
    7. Steven M Fazzari & Piero Ferri & Anna Maria Variato, 2020. "Demand-led growth and accommodating supply," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 44(3), pages 583-605.
    8. Olivier Allain, 2021. "A supermultiplier model of the natural rate of growth," Metroeconomica, Wiley Blackwell, vol. 72(3), pages 612-634, July.
    9. Gahn, Santiago José, 2021. "On the adjustment of capacity utilisation to aggregate demand: Revisiting an old Sraffian critique to the Neo-Kaleckian model," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 325-360.
    10. Hansen, Mads R., 2024. "Demand regimes and the business-cycle: Feedback effects between capacity utilization and income distribution taking into account overhead labor - SVAR-estimates for Germany (2007 - 2021)," IPE Working Papers 227/2024, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    11. Thomas Palley, 2018. "Unemployment and growth," FMM Working Paper 21-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    12. 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.
    13. Piero Ferri & Fabio Tramontana, 2022. "Autonomous demand, multiple equilibria and unemployment dynamics," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(1), pages 209-223, January.
    14. Allain, Olivier, 2022. "A supermultiplier model with two non-capacity-generating semi-autonomous demand components," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 91-103.
    15. Guilherme Haluska & Julia Braga & Ricardo Summa, 2021. "Growth, investment share and the stability of the Sraffian Supermultiplier model in the U.S. economy (1985–2017)," Metroeconomica, Wiley Blackwell, vol. 72(2), pages 345-364, May.
    16. 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).
    17. Thomas Palley, 2018. "The economics of the super-multiplier," FMM Working Paper 33-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    18. Barbieri Góes, Maria Cristina & Deleidi, Matteo, 2022. "Output determination and autonomous demand multipliers: An empirical investigation for the US economy," Economic Modelling, Elsevier, vol. 116(C).
    19. Eckhard Hein & Franz Prante & Alessandro Bramucci, 2023. "Demand and growth regimes in finance-dominated capitalism and a progressive equality-, sustainability- and domestic demand-led alternative: A post-Keynesian simulation approach," PSL Quarterly Review, Economia civile, vol. 76(305), pages 181-202.
    20. Manuel Gonzalo, 2023. "The Indian Growth Acceleration: A Brazilian Demand-led Insight," Millennial Asia, , vol. 14(4), pages 509-534, December.
    21. 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.

    More about this item

    Keywords

    effective demand; economic growth; income distribution; capacity utilization; theoretical closures;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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