Growth Rate and Level Effects,the Stability of the Adjustment of Capacity to Demand and the Sraffian Supermultiplier

Abstract

The paper presents a simple but complete formal version of the Sraffian supermultiplier model in which (i) growth is led by the autonomous components of demand that do not create capacity; (ii) private productive investment is an induced expenditure; and (iii) income distribution is exogenous. We show that the main results of the long-period and fully adjusted versions of the model in terms of growth rate and level effects are quite similar and therefore that such results in no way require the full adjustment of capacity to demand. We then analyze a simple set of sufficient dynamic local stability conditions that allow the long-period positions to gravitate towards the fully adjusted position in which capacity is adjusted to demand and that also provide the upper limit to demand-led growth paths. Finally, we show how some critics of the model have misinterpreted it as being supply-led and how this has led to a further confusion between the analysis of the tendency towards a constant value of the capacity-saving-determined warranted rate of growth and the proper stability analysis of the opposite process of adjusting capacity to demand (which tends to adjust the warranted rate endogenously to the growth rate of autonomous demand).     

Some Issues in the Sraffian View of Competition: Starting from Clifton

The article seeks to advance discussion about the nature of competition and of the ‘firm’ consistent with a classical-Sraffian perspective on relative prices and distribution. Discussion focuses primarily on the work of James Clifton published from the late 1970's. Clifton's insights have a direct bearing on issues at the heart of broader Sraffian research: how relative prices are anchored by the mobility of capital; whether the rate of profit should be interpreted as the exogenous distributive variable in the Sraffian price system; and, the forces which govern the ‘normal’ rate of profit, including the causal significance of the rate of growth. While Clifton's approach lends support to the interpretation of the rate of profit as a target rate of return, the article takes issue with Semmler's explanation as being endogenous to the price system. An alternative exogenous explanation of the target rate by reference to the rate of growth from Eichner is also considered, but rejected, despite the similarities between the insights of Clifton and Eichner into corporate pricing. Some useful implications from Clifton's analysis—as to the modeling of classical competition and gravitation—are also drawn out.     

Long-run Effective Demand in the US Economy: An Empirical Test of the Sraffian Supermultiplier Model

The Sraffian supermultiplier is a model of demand-led growth that stresses the importance of the autonomous components of aggregate demand (exports, public spending and autonomous consumption). This article tests empirically some major implications of the model employing macroeconomic data for the United States. In particular, we study the long-run relation between autonomous demand and output through cointegration analysis. The results suggest that autonomous demand and output are cointegrated and that autonomous demand exerts a long-run effect on output. There is also some evidence of simultaneous causality, especially in the short-run. Movements in autonomous demand and in the investment share are also found to be positively related, with Granger-causality going from Z to I/Y.     

Putting Austerity to Bed: Technical Progress,Aggregate Demand and the Supermultiplier

ABSTRACT

The paper investigates the determinants of private investment and economic growth from a theoretical perspective. We start with a critical analysis of the crowding-out effect and we present a new version of the Sraffian Supermultiplier: a model that accounts for both the multiplier and accelerator effects. We focus on different types of fiscal policies: generic ones and ‘mission-oriented’ ones that set a new direction for the economy. We show that mission-oriented policies have the potential to generate the largest positive effect on investments and output growth as well as on innovation processes and labour productivity growth.     

The Social Significance of Consumption and the Elasticity of Output to Demand in the Long Run: A Reply to Gualerzi

Gualerzi's comment on Trezzini’s 2015 article (‘Growth without Normal Capacity Utilization and the Meaning of the Long-Run Saving Ratio.’) underestimates the role played by the long-run elasticity of output with respect to changes in aggregate demand in my analysis and in the demand-led processes of growth.     

Neo-Kaleckian and Sraffian Controversies on the Theory of Accumulation

Abstract

Non-orthodox economists generally share the Keynesian Hypothesis of the independence of investment from capacity savings, in the long run no less than in the short run. This hypothesis marks an essential point of difference from neoclassical theory. Keynes showed that within the limits of the existing capacity utilisation, investment determines savings rather than the other way around. How best to extend this conclusion to the long run is the object of the current paper. The paper assesses the controversy on demand-led growth that has taken place since the mid-1980s between neo-Kaleckian and Sraffian authors. The Sraffian front may be divided into a first and a second Sraffian position, the latter being the Sraffian supermultiplier approach. I shall argue that this second approach is the most promising framework for analysing economic growth.     

Technology, demand and distribution: a cumulative growth model with an application to the Dutch productivity growth slowdown

This paper argues that the case for real wage growth restraint,and the consequent restoration of profitability, which the mainstreamconsensus regards as a necessary condition for sustained outputand productivity growth, is based on weak foundations, becauseit neglects the negative impact of wage moderation on productivitygrowth. Using a general Keynesian growth model, which integratesa (wage-led or profit-led) demand regime and a productivityregime (incorporating the productivity-growth enhancing effectsof higher demand and higher real wages), the conditions areidentified under which real wage restraint fails to raise outputand productivity growth. The model is applied empirically tothe Netherlands (1960–2000).     

加入WTO与民营企业"走出去"战略的推进

我国“走出去”已经起步,但从总体上看,与我国的国际地位和经济实力相比尚有差距,我国对外投资还处在数量少,规模小,效益低的起步阶段。但从我国经济发展的前景看,“走出去”的发展空间和潜力很大。如何进一步加快我国企业“走出去”步伐,提高“走出去”效果,这一问题摆在我们面前。“民营企业”应成为“走出去”的主体《2002年世界投资报告》认为,中国企业在海外拓展业务已经取得了较快的发展。截止到2001年,中国最大的12家跨国公司,主要以国有企业为主,掌控着超过300亿美元的国外资产,拥有大约两万名外国员工,国外销售额达到330亿美元。经…     

On the Choice Between the Stocking Rate and Time in Range Management

A long standing question in range management concerns the relative importance of the stocking rate versus the length oftime during which animals graze a particular rangeland. Weaddress this question by analyzing the problem faced by a privaterancher who wishes to minimize the long run expected net unit cost (LRENC) from range operations by choosing either the stocking rate or the length of time during which his animals graze hisrangeland. We construct a renewal-theoretic model and show that,in general, this rancher's LRENC with an optimally chosen stocking rate is lower than his LRENC with an optimally chosen grazing cycle length. From a management perspective, this means that correct stocking of the range is more important than the length of time during which animals graze the range. In addition, our research shows how to address questions concerning the desirability of temporal versus non-temporal controls in managing naturalresources such as fisheries and hunting grounds.     

Improving the estimation of total factor productivity growth: capital operating time in a latent variable approach

Measuring labor and capital services accurately is essential to obtaining reliable estimates of production functions and total factor productivity (TFP) growth. Using data on the operating time of capital, a series that exists for the French business sector, greatly improves the measurement of effective capital services in production. The ensuing estimation results are consistent with Cobb–Douglas technology under constant returns to scale, with the factor elasticities not statistically different from their income shares. In the same framework, TFP growth is estimated as a latent variable and found to be less volatile than accounting residuals, negatively correlated with employment, and free of cyclicality. It is statistically best estimated as a first-order autoregressive process, with an autoregressive coefficient of 0.95. Total factor productivity growth was estimated to have declined steadily between the mid-1970s and mid-1990s, but the rate of decline has diminished since then.     

A two-sector Kaleckian model of growth and distribution with endogenous productivity dynamics

This study extends a two-sector Kaleckian model of output growth and income distribution by incorporating endogenous labour productivity growth. The model is composed of investment goods and consumption goods production sectors. The impact of a change in wage and profit shares on capacity utilisation and output growth rates at the sectoral and aggregate levels are identified. The study reveals short-run cyclical capacity utilisation rates and productivity growth dynamics. Even if the short-run steady state is stable, the capital accumulation rate in the consumption goods sector must decrease more than that in the investment sector for long-run stability. When simultaneous rises in profit shares in both the sectors affect long-run aggregate economic growth differently at a steady state, the distributional interests between the same class in different sectors may hamper the long-run economic growth. A policy message is that the effect of income distribution on industrial output growth is not always beneficial. These phenomena are specific to two-sector models and cannot be observed when using conventional aggregate growth models.     

当前劳动就业的几个认识误区

目前在劳动就业方面存在着以下认识误区:经济增长能够带来就业需求增加;视第三产业为社会富余劳动力的“收容所”,认为提前退休或低龄退休能缓解就业压力;把政府购买就业岗位看成是促进失业者再就业的可行方法等。走出认识误区,是制定有效政策、促进中国就业和再就业及实现可持续就业的关键环节。     

Some Reflections on the Teaching of Economics and Commerce in a Developing Country

The author, a teacher of economics and commercial subjects in Papua New Guinea which recently became independent, reports on the difficulties encountered in teaching these subjects in this developing country, where education of the western type is still associated in the minds of many with an aura of “cargo-cult” thinking. Other problems are the lack of textbooks in the language of the country, and the fact that the traditional beliefs of the majority of students run counter to principles of modern business and economics, making for a lack of even the most elementary economic understanding. Thus, the author believes, the transplanted course now being taught in Papua New Guinea cannot achieve the objective of providing basic economic understanding.

Mr. Smyth also suggests that the teacher “should be concerned with searching out those aspects of the traditional culture fhat can be used as ‘spring boards’ into a more complex study of the modem economy.”     

协调内外需关系的若干理论思考

内需反映一国的内生增长能力,外需反映一国利用国外市场和国外资源实现增长的能力,内外需关系可以用内外需比指标大致衡量。一般而言,内外需呈现相互替代、相互促进的关系。影响内外需关系的因素包括国内市场规模、经济发展阶段、贸易政策与制度等因素,而内外需关系又将影响到产业结构及产业关联、内外经济循环、贸易条件及国民福利等方面。在协调内外需关系方面,政府应扮演重要角色,确定合理的目标及方向。     

Simulating weight restrictions in data envelopment analysis using the subjective and objective integrated approach

This article investigates inflation in Mozambique using long-range dependence (LRD) techniques in monthly data from December 1995 to October 2012. Two important features of the data are analysed: persistence and seasonality, looking at aggregated and disaggregated data. The stability of the parameters across the sample is also investigated. The results indicate a high degree of persistence in the data along with a strong seasonal pattern. Policy implications are discussed.     

A systemic approach to modelling and estimating demand for money(ies)

This article uses a consumer theory-based systemic approach to model the demand for monetary liquid asset holdings in Chile. We implement the suggestions and caveats of aggregation theory for the estimation of a demand system for liquid assets (monies) in static, dynamic and time-varying parameters setups. Our results are robust and theoretically consistent with consumer theory restrictions, as a system derived from a utility maximizing framework and a quasi concave utility function. In our estimations, we find stability of interest rate elasticities, in contrast to previous related literature. We also document evidence that long (short) maturity rates are associated to less (more) liquid assets.     

An empirical test of the Post-Keynesian growth model applied to functional income distribution and the growth regime in Brazil

The main purpose of this paper is to empirically investigate whether, between 1970 and 2008, the Brazilian economy was profit-led or wage-led. To this end, we approach a canonical post-Keynesian growth model (PKGM) to estimate certain vector autoregressive (VAR) models and perform Granger non-causality tests. Three main results are extracted from the generalized impulse-response functions provided by the VAR models. First, a positive profit-share innovation affects economic growth and capacity utilization rate, both in the same direction, suggesting a profit-led pattern. Second, a profit share shock positively affects both the ratio actual/potential output, and capital accumulation, reinforcing the previous result. Third, a capacity utilization shock is shown to positively affect both output growth and capital accumulation via the accelerator effect. On the one hand, the pairwise Granger non-causality test does not provide any evidence of causality running from profit share to economic growth or capacity utilization. On the other hand, there is some evidence of Granger causality running from profit share to capital accumulation.     

Technological opportunity and the growth of knowledge: A Schumpeterian approach to measurement

A model of endogenous growth, based on Schumpeter's notion of trustified capitalism, is developed and applied to firm-level data for the period 1973–1991. The model relates the market value of a firm to its current profits and to its R&D expenditures. The relationship depends upon the expected rate of knowledge growth, the expected value of an innovation and the elasticity of the R&D production function. Over the sample period, investors expected knowledge to grow at an average rate of 5 percent, a measure which reflects both process innovations and new product discoveries. Elasticities of the R&D production functions are estimated for thirteen industry groups and interpreted as measures of technological opportunity. There is no evidence of secular decline in technological opportunity over the sample period, but there is some evidence of diminishing returns to R&D intensity. Variations in technological opportunity over time are not correlated across industries. In contrast, the expected rates of knowledge growth at the industry level are highly correlated with the aggregate expected rate.     

Notes and comments. Cumulative causation, interrelatedness and the theory of economic growth: a reply to Argyrous and Toner

In responding to the comments of George Argyrous and PhillipToner, this reply focuses on four areas of contention betweenmyself and my critics. First, it is suggested that my originalmodel places more weight on the growth-enhancing characteristicsof increasing specialisation in production than either Argyrousor Toner acknowledge. Secondly, it is demonstrated that both'formal' and 'verbal' models of cumulative growth typicallyplace unwarranted emphasis on the importance of initial conditions.Thirdly, the evolutionary properties of my original model aredefended against the claim that lock-in renders it mechanicaland deterministic. Finally, it is argued that mathematicallymodelling open but structured social processes (such as economicgrowth) should not be rejected as redundant in principle.