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Autonomous demand, Harrodian instability and the supply side
Author(s) -
Skott Peter
Publication year - 2019
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.12181
Subject(s) - economics , instability , argument (complex analysis) , aggregate demand , demand side , supply side , supply and demand , contrast (vision) , microeconomics , macroeconomics , computer science , monetary policy , biochemistry , chemistry , physics , artificial intelligence , mechanics
A recent literature introduces autonomous demand as the driver of long‐run economic growth and as a stabilizing force that tames Harrodian instability. The argument is unconvincing. The stabilizing effect is modest for plausible parameter values and more importantly, it is questionable whether any components of aggregate demand can be viewed as autonomous in the long run. By contrast, models that include the supply side (the labor market) and/or economic policy can address Harrodian instability and produce level and growth effects that resemble those derived in the literature on autonomous demand.