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Harrodian Instability: a Misleading Concept

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  • Trezzini, Attilio

    (Università degli Studi Roma Tre (Roma Tre University))

Abstract

The concept of Harrodian instability is reexamined taking into due consideration the fact that growth occurs through irregular fluctuations. This undermines the cornerstone of Harrodian instability, namely the way in which investment is assumed to react to a degree of utilization differing from its desired level. The methodo-logical consequence of Harrodian instability is reconsidered: the assumption that only theoretical positions in which capacity and demand are perfectly adjusted can be regarded as theoretically acceptable appears to be based on weak foundations. The relevance of the cumulative tendencies toward expansion and recession is greatly re-duced. Different ways of addressing these hypothetical phenomena are suggested.

Suggested Citation

  • Trezzini, Attilio, 2017. "Harrodian Instability: a Misleading Concept," Centro Sraffa Working Papers CSWP24, Centro di Ricerche e Documentazione "Piero Sraffa".
    • Handle: RePEc:ris:sraffa:0024
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Brian Hartley, 2020. "Corridor stability of the Kaleckian growth model: a Markov-switching approach," Working Papers 2013, New School for Social Research, Department of Economics, revised Nov 2020.
    3. Mauro Caminati & Serena Sordi, 2019. "Demand‐led growth with endogenous innovation," Metroeconomica, Wiley Blackwell, vol. 70(3), pages 405-422, July.
    4. Mark Setterfield, 2019. "Long-run variation in capacity utilization in the presence of a fixed normal rate," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(2), pages 443-463.

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    More about this item

    Keywords

    Harrodian Instability; Demand-led Growth Theory; Methodology;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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