Explore the vast range of titles available.

The balance-of-payments-constrained growth (BPCG) model provides an interesting hypothesis regarding economic growth. The main implication is that world demand places the dominant constraint to which individual country growth adjusts. I discuss this implication and argue that tests of the BPCG model have essentially been tests of the hypothesis that trade is balanced over the long run; a plausible hypothesis but one that need not hold mainly through responses to world demand (as transmitted via income elasticities). I then discuss the role of relative prices and investment, point out logical inadequacies in the traditional BPCG framework and suggest an alternative theoretical framework to investigate its robustness. Our theoretical and empirical explorations suggest that traditional tests of the BPCG model may be misleading. Including investment as a proxy for the capacity to export and addressing endogeneity issues, for example, noticeably weakens the influence of world demand. The evidence presented contributes to reconciling evidence supporting the BPCG hypothesis with recent work that consistently finds an important role for the level of the real exchange rate and investment, independently of world demand.

This paper presents a long-run study of the relationship between autonomous and induced demand for the United States. Our exercise can be considered a contribution to the burgeoning literature revolving around autonomous demand-led growth models, which have displayed the potential to establish bridges not only within the post-Keynesian community, but also between post-Keynesian economics and other evolutionary and pluralistic approaches to economic growth. In particular, we study the long-run dynamic relationship between autonomous demand – which comprises R&D expenditures, government spending, exports and residential investment – and induced demand. Through a cointegration model with quantile-varying coefficients, we account for the possibility of changes in the relationship between the two variables and demonstrate that the long-run equilibrium relationship between autonomous and induced demand is robust to exogenous shocks and changes in the parameters.

Purpose Building on evidence of a stronger multiplier effect of social benefits during Brazil’s 2015–2016 crisis, and the relative stability of consigned credit to retirees compared to active workers, we propose a demand-driven theoretical model to formalize the observed higher transfer multiplier in recessions. Design/methodology/approach We develop a neo-Kaleckian theoretical framework to delve into the circumstances under which the multiplier effect is augmented during economic downturns. Our model incorporates two classes and household borrowing. Findings We find that the countercyclical nature of both credit supply and demand contributes to a more pronounced countercyclical multiplier effect (for both transfer and autonomous expenditure multiplier). Greater access to consigned credit strengthened credit’s countercyclical role, enhancing social transfers’ stabilization during crises. However, high household debt limits this effect. Originality/value In essence, our model formalizes the notion that social benefits, when combined with credit mechanisms, constitute a significant element in income stabilization during economic contractions. Nevertheless, elevated household debt constrains this impact.

According to Verdoorn's law, productivity growth is endogenous to output growth, due to the existence of increasing returns to scale, broadly defined. Such an idea is at the root of both the endogenous growth theory and the Kaldorian approach. While in Kaldor's view, a country's growth is demand-driven, in the endogenous growth theory, growth is determined by the growth of the factors of production and hence growth is supply-constrained. This article empirically tests both assumptions for Verdoorn's law by using a dynamic panel of manufacturing industries for seventy countries at different stages of development for the years between 1963 and 2009. In order to distinguish between these approaches, two different specifications are estimated where the growth of output and the supply of factors of production are instrumentalized by system generalized method of moments (GMM)estimators. The results show that, if it is assumed that the growth rates of countries are demand-driven, a faster growth of output increases productivity growth due to the existence of increasing returns. Alternatively, if it is assumed that output growth is driven by the growth of the supply of the factors of production, it is not possible to conclude that productivity growth is induced by output growth.

The European fiscal rules and the debt sustainability analysis that underpins them are grounded in supply-side growth theory. This perspective not only restricts fiscal policy to a short-term stabilizing role but also leads to an inadequate assessment of public debt trajectories. In this article, we propose adopting a demand-led growth framework—particularly the supermultiplier—as a more suitable analytical basis for evaluating fiscal policy. In these models, economic growth is driven by the dynamics of autonomous demand components, including public spending. As a result, fiscal policy plays a more substantial role than simply smoothing cyclical fluctuations around a supply-determined path. We identified three main avenues through which the supermultiplier approach can inform fiscal policy analysis: assessing the short- and long-term effects of changes in public spending on GDP growth, analyzing public debt sustainability under alternative fiscal scenarios, and evaluating the outcomes of different fiscal strategies in specific historical episodes within the literature on \"growth regimes\". As an illustration, we applied a supermultiplier model to the Spanish economy to contrast the impact of fiscal policy following the global financial crisis and the COVID-19 pandemic. While austerity measures during the former deepened the recession, expansionary fiscal policy in the latter case supported a faster recovery. Paradoxically, fiscal tightening was accompanied by rising debt-to-GDP ratios, whereas public debt has declined rapidly since 2021. In the current context, this approach could be especially valuable for revisiting the European Commission's Debt Sustainability Analysis methodology.

This paper discusses methodological individualism and the perceived \"need\" for microfoundations in economic theory. It argues that the persistent focus on microfoundations has led a large part of the field to overlook the complexity of social interactions, the relevance of historical processes, and the characteristics of each society in understanding economic growth and development. The paper suggested focusing on social foundations as an alternative to microfoundations that is particularly relevant for studying economic development processes. It proposes framing the post-Keynesian view of demand-led growth and distribution-led growth within a conceptual framework of socio-economic development as a valid approach, consistent with social foundations, to understand a phenomenon as complex and multi-causal as development.

Abstract Despite the global downturn since 2008, the growth in BRICS countries as a group is least hampered as compared to the growth in the world, in general, and developed countries, in particular. Is it due to the strong domestic demand factors or external factors is an empirical question to be answered. Further, some economists are promulgating for a new development strategy of domestic demand-led growth. Hence, this article tries to examine the role of domestic and external demand to growth in BRICS countries. Domestic investment is taken to explore the impact of domestic demand on growth, while export and import variables are used to investigate the role of external demand in economic growth. To cater to the objective, causality analysis is done among exports, imports, domestic investment and economic growth using the vector auto regression analysis. Generalized impulse response functions are plotted to get an insight of dynamic interrelationships among these variables. The results are country-specific and mixed evidence of export-led and domestic demand-led growth is found depending on the individual countries of BRICS.

This paper discusses the financial sustainability of demand-led growth models. We assume a supermultiplier growth model in which household consumption is the autonomous component of demand that drives growth and discuss the financial sustainability of such dynamics of growth from the perspective of the working households. We show that for positive rates of growth the model converges to an equilibrium where worker households are accumulating debt and not wealth. We also show that when the economy is growing at a rate that is positive, but not too high the model also implies that households will not be able to service their debt at the point of full long run equilibrium. We then conclude that this household debt-financed consumption pattern of economic growth generates an internal dynamic that leads to financial instability.

Empirical research based on the Bhaduri/Marglin-variant of the Kaleckian model has recently shown that aggregate demand in many medium-sized and large open economies tends to be wage-led in the medium to long run, even in a period of increasing globalisation. In this paper we extend this type of analysis and integrate the effects on productivity growth, theoretically and empirically. Productivity growth is introduced into the theoretical model making use of the Verdoorn effect or of Kaldor's technical progress function and hence of a positive relationship between GDP or capital stock growth and productivity growth. Further on, a cost-push or Marx/Hicks-effect and hence a positive impact of real wage growth or the wage share on productivity growth is taken into account. In the empirical part we estimate productivity growth equations for six countries introducing these two effects. Finally, economic policy conclusions are drawn.

The goal of the paper is to analyze the learning economy from the perspective of a newly emerging economic regime where learning and knowledge creation are the key determinants of economic performance. The paper employs an alternative and analytically useful viewpoint that provides novel insights on standard topics of economic inquiry and highlights more dynamic elements such as interactive learning, trust, and collaboration. A qualitative and quantitative analysis is undertaken predicated on a set of guiding research questions. After examining patterns of consumption and production that delineate the learning economy as a distinct economic regime, the paper considers certain social conditions central to its functioning and sustainability over time. A conceptual model of the transition pathways to a learning economy is developed which argues that changes in aggregate consumption patterns and related means of production are linked to the progressive satisfaction of needs claims of consumers as real incomes rise. The normative implications of transitioning to a learning economy regime are explored based on criteria of labor market efficiency and social equity. The results of this empirical investigation suggest countries within a learning economy regime benefit from national systems that deliver lasting welfare and well-being to their populations. Policy implications are presented which focus on supporting learning and competency building at all levels of society. Together, they emphasize the need for policy makers to adopt a holistic approach to ensure broad participation in the learning economy regime. The paper concludes with a discussion of limitations and possible paths for future research.