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Demand-led growth and accommodating supply

: Demand-led growth and accommodating supply

This paper presents a "supermultiplier" model in which the growth of autonomous demand (demand independent of the state of the economy) determines the steady-state growth rate of output. With reasonable parameters, endogenous adjustment of labor supply and productivity causes supply to accommodate the demand-led growth path, reconciling Harrod's warranted rate of demand growth with the growth of supply. The model delivers a range of feasible aggregate growth paths and unemployment rates rather than a single "natural rate." The results explain how economies can become trapped with low growth due to weak demand or fiscal austerity and suggest policy responses to "secular stagnation."

Quelle

Fazzari, Steven; Ferri, Piero; Variato AnnaMaria: Demand-led growth and accommodating supply
FMM Working Paper, 32 Seiten

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