Essays on macroeconomic dynamicsa classical-keynesian approach

Abstract

This doctoral thesis studies economic growth through the principle of effective demand. Effective demand is not "just any" demand, it is the demand capable of paying normal prices (those prices that allow the reproduction of goods). This implies that it is not possible to study effective demand without, in parallel, having a price theory that is compatible with it. We consider that non-capacity-generating autonomous demand-led growth models, such as the Sraffian Supermultiplier (SSM) and some variants of the neo-Kaleckian model, consistently analyze economic growth through the principle of effective demand. According to these models, in the long run, effective demand determines normal productive capacity, while non-capacity-generating autonomous demand generates induced consumption (through the multiplier) and induced (capacity-creating) investment through the flexible accelerator mechanism (Serrano, 1995: 67). In these models, firms continuously and gradually attempt to reach the normal (cost-minimizing) rate of capacity utilization, so the system is in equilibrium and reaches its fully-adjusted position when capacity is normally utilized. Non-capacity-generating autonomous demand is the whole of “all those expenditures that are neither financed by the contractual (wage and salary) income generated by production decisions, nor are capable of [directly] affecting the productive capacity of the capitalist sector of the economy” (Serrano, 1995: 71). Thus, the non-capacity generating autonomous components of aggregate demand are those that: (i) are not mechanically linked to the pace of production income and of capital accumulation, and (ii) do not (directly) generate productive capacity. In this thesis, we carry out an empirical research based on the class of Keynesian models that emphasize non-capacity-generating autonomous demand as the main driver of long-run growth. Our results are important because they empirically validate the main intuitions of these models. Our main contribution is finding evidence that the rate of growth of the whole of non-capacity-generating autonomous demand shapes the rate of growth of output. This is relevant because: (i) several researches (even in Post Keynesian strands) doubt that any component of demand can realistically be considered autonomous in the long run; and (ii) without the empirical validation of the autonomy of non-capacity-generating autonomous demand, the SMM approach loses an important part of its robustness. We hope that this thesis contributes to open questions and to generate a lively and constructive debate within the Post-Keynesian economics scientific research program.