Supply and Demand in the Theory of Long-run Growth: Introduction to a symposium on demand-led growth |
| |
Authors: | Mark Setterfield |
| |
Institution: | Department of Economics , Trinity College , Hartford, CT, 06106, USA |
| |
Abstract: | Recent developments in growth theory have encouraged a revisionist interpretation of the field. According to this interpretation long-run growth should be, and always has been, interpreted as a supply-side process. The focus of this symposium is the macro-economics of demand-led growth. As a precursor to the contributions that follow, two central insights of demand-led growth theory are highlighted. First, chronic effective demand problems create a role for aggregate demand in determining the utilization rates of productive resources, even in the long run. Second, the demand-led actual rate of growth influences both the accumulation and productivity of factor inputs, and hence the economy's potential rate of growth. |
| |
Keywords: | |
|
|