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Economic Growth and Development

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  • Mark Setterfield

Abstract

The historical growth record is reviewed and growth is shown to have resulted in divergence between the incomes of fast growing rich economies and slower growing poorer economies. Supply-led, neoclassical growth is then contrasted with demand-led, Keynesian growth. Three Keynesian growth theories (Harrodian, Kaleckian, and Kaldorian) are outlined and shown to differ according to whether investment spending or export demand is the key “driver” of demand formation and growth. The properties of Keynesian growth are then identified and discussed. These include the relationship between saving behaviour and growth, the effects of income redistribution on growth, the relationship between technical progress and growth, and the interaction of supply and demand in the growth process.

Suggested Citation

  • Mark Setterfield, 2014. "Economic Growth and Development," Working Papers 1404, Trinity College, Department of Economics.
    • Handle: RePEc:tri:wpaper:1404
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    File URL: http://www3.trincoll.edu/repec/WorkingPapers2014/WP14-04.pdf
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    References listed on IDEAS

    as
    1. John Harvey, 2014. "Using the to explain the U.S. business cycle, 1950-2009," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 36(3), pages 391-414.
    2. Cynamon,Barry Z. & Fazzari,Steven & Setterfield,Mark (ed.), 2013. "After the Great Recession," Cambridge Books, Cambridge University Press, number 9781107015890, September.
    3. A. B. Atkinson, 2009. "Factor shares: the principal problem of political economy?," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(1), pages 3-16, Spring.
    4. Paul Davidson, 1991. "Is Probability Theory Relevant for Uncertainty? A Post Keynesian Perspective," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 129-143, Winter.
    5. Stern, Nicholas, 1991. "The Determinants of Growth," Economic Journal, Royal Economic Society, vol. 101(404), pages 122-133, January.
    6. Antonella Palumbo, 2009. "Adjusting Theory to Reality: The Role of Aggregate Demand in Kaldor's Late Contributions on Economic Growth," Review of Political Economy, Taylor & Francis Journals, vol. 21(3), pages 341-368.
    7. Thomas I. Palley, 2002. "Economic contradictions coming home to roost? Does the U.S. economy face a long-term aggregate demand generation problem?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 25(1), pages 9-32.
    8. Cornwall,John & Cornwall,Wendy, 2001. "Capitalist Development in the Twentieth Century," Cambridge Books, Cambridge University Press, number 9780521341493, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Economic growth; divergence; demand-led growth; Keynesian growth theory;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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