HARROD'S KNIFE‐EDGE AND CONSUMPTION FUNCTIONS | Zendy

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HARROD'S KNIFE‐EDGE AND CONSUMPTION FUNCTIONS

Author(s) -

Nakajima Tetsuya

Publication year - 1990

Publication title -

metroeconomica

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 1.256

H-Index - 29

eISSN - 1467-999X

pISSN - 0026-1386

DOI - 10.1111/j.1467-999x.1990.tb00461.x

Subject(s) - economics , consumption (sociology) , investment function , investment (military) , consumption function , function (biology) , keynesian economics , capitalist economy , instability , neoclassical economics , microeconomics , production (economics) , physics , mechanics , law , capitalism , sociology , social science , evolutionary biology , politics , political science , fiscal policy , biology

This paper reconsiders Harrod's knife‐edge instability of the capitalist economy. An investment function of the type used by Harrod is combined with a consumption function of the relative income hypothesis type. It will be shown that, even under such an investment function, knife‐edge instability can be ruled out if a part of consumption behaves steadily and capitalists do not change their expectations very rapidly.

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