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Paths of accumulation and growth: Towards a Keynesian long-period theory of output

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  • Oscar de-Juan

Abstract

According to the principle of effective demand, the equilibrium level of aggregate output is a multiple of the expected autonomous demand for the period under consideration. Aggregate demand matches aggregate supply in equilibrium, but the equilibrium may and usually does lie below the output corresponding to full capacity and full employment. However, in the long term firms are presumed to use capacity at the normal or desired degree. Can the principle of effective demand be extrapolated to conclude that the rate of growth of output will depend on the expected rate of growth of autonomous demand? A positive answer would be a significant step towards a Keynesian long-period theory of output. This paper attempts to make an advance in that direction. Starting from a 'prospective accelerator' that incorporates expected increases in autonomous demand and takes account of an excess of capacity in order to eliminate it, this paper shows that the path of autonomous demand determines both the actual and the warranted rates of growth.

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  • Oscar de-Juan, 2005. "Paths of accumulation and growth: Towards a Keynesian long-period theory of output," Review of Political Economy, Taylor & Francis Journals, vol. 17(2), pages 231-252.
    • Handle: RePEc:taf:revpoe:v:17:y:2005:i:2:p:231-252
    DOI: 10.1080/09538250500067270
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    References listed on IDEAS

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    Cited by:

    1. Nomaler, Önder & Spinola, Danilo & Verspagen, Bart, 2021. "R&D-based economic growth in a supermultiplier model," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 1-19.
    2. Graham White, 2023. "Autonomous demand, expectations and calibration: simulating demand led growth," Working Papers 2023-08, University of Sydney, School of Economics.
    3. Di Domenico, Lorenzo, 2021. "Stability and determinants of the public debt-to-GDP ratio: an Input Output – Stock Flow Consistent approach," MPRA Paper 109970, University Library of Munich, Germany.
    4. Sergio Cesaratto, 2017. "Beyond the traditional monetary circuit: endogenous money, finance and the theory of long-period effective demand," Department of Economics University of Siena 757, Department of Economics, University of Siena.
    5. Michaelis Nikiforos, 2018. "Distribution-led growth through methodological lenses," FMM Working Paper 24-2018, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    6. Nomaler, Önder & Spinola, Danilo & Verspagen, Bart, 2020. "Schumpeter and Keynes: Economic growth in a super-multiplier model," MERIT Working Papers 2020-049, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    7. Di Domenico, Lorenzo, 2021. "Stability and determinants of the public debt-to-GDP ratio: an Input Output – Stock Flow Consistent approach," MPRA Paper 110460, University Library of Munich, Germany.
    8. Sergio Cesaratto & Stefano di Bucchianico, 2020. "Endogenous money and the theory of long-period effective demand," Bulletin of Political Economy, Bulletin of Political Economy, vol. 14(1), pages 1-38, June.
    9. Michalis Nikiforos, 2018. "Some Comments on the Sraffian Supermultiplier Approach to Growth and Distribution," Economics Working Paper Archive wp_907, Levy Economics Institute.

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