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Convergence Towards the Normal Rate of Capacity Utilization in Neo‐ K aleckian Models: The Role of Non‐Capacity Creating Autonomous Expenditures
Author(s) -
Lavoie Marc
Publication year - 2016
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/meca.12109
Subject(s) - economics , safeguarding , convergence (economics) , growth model , microeconomics , distribution (mathematics) , capacity utilization , instability , simple (philosophy) , neoclassical economics , mathematical economics , econometrics , macroeconomics , mathematics , physics , mechanics , medicine , mathematical analysis , nursing , philosophy , epistemology
Neo‐Kaleckian models of growth and distribution have been highly popular among heterodox economists. Two drawbacks of these models have, however, been underlined in the literature: first, the models do not usually converge to their normal rate of capacity utilization; second, the models do not include the Harrodian principle of dynamic instability. Some Sraffian economists have long been arguing that the presence of non‐capacity creating autonomous expenditures provides a mechanism that brings back the model to normal rates of capacity utilization, while safeguarding the main Keynesian message and without going back to classical conclusions. The present article provides a very simple proof of this, showing within a neo‐Kaleckian model that the Harrodian principle of dynamic instability gets tamed by the presence of autonomous consumer expenditures.