HYSTERESIS IN THE KALECKIAN GROWTH MODEL: A BAYESIAN ANALYSIS FOR THE US MANUFACTURING SECTOR FROM 1984 TO 2007

Responding to the Classical criticism of the baseline Kaleckian growth model which is not fully adjusted in the long run, post‐Kaleckians have proposed model variants that imply the economy to converge to a steady state in which the realized and the normal utilization rates as well as the realized and the expected secular rate of sales growth are congruent. Convergence is caused by endogenous adjustments of the conventional rates to their respective realized rates which is theoretically justified by hysteresis effects. Using a dynamic linear specification of the Kaleckian investment function in state‐space form and by the aid of the Kalman filter, this paper studies the endogeneity of the normal utilization rate and the expected secular rate of sales growth empirically for the US manufacturing sector and its sub‐sectors. We find evidence for an endogenous adjustment of both variables.