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Inconsistency and over‐determination in neo‐Kaleckian growth models: A note
Author(s) -
DávilaFernández Marwil J.,
Oreiro Jose L.,
Punzo Lionello F.
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.12190
Subject(s) - economics , microeconomics , capacity utilization , neoclassical economics , variable (mathematics) , growth model , yield (engineering) , capital (architecture) , path (computing) , mathematical economics , keynesian economics , econometrics , computer science , mathematics , physics , history , mathematical analysis , archaeology , programming language , thermodynamics
This short note argues that the canonical neo‐Kaleckian growth model does not yield a balanced growth path due to the absence of an inbuilt mechanism by which desired and actual rates of capital accumulation are equalized. Introducing non‐generating capacity autonomous demand does not solve such inconsistency. Contrary to what Lavoie ([Lavoie, M., 2016]) claims, we show that the latter is also unable to bring capacity utilization to its normal level. In light of recent contributions (e.g., Nikiforos, [Nikiforos, M., 2013], [Nikiforos, M., 2016]), we suggest that making normal capacity utilization an endogenous variable is an alternative better suited to deal with the issue.