Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/new/wpaper/2111.html
   My bibliography  Save this paper

Harrodians and Kaleckians: a suggested reconciliation and synthesis

Author

Listed:
  • Mark Setterfield

    (Department of Economics, New School for Social Research)

Abstract
The Kaleckian and Harrodian approaches to growth frequently arrive at antagonistic positions with respect to key issues in heterodox macrodynamics, including the treatment of the rate of capacity utilization and the very nature of the long-run growth process. Nevertheless, this paper is devoted to exploring the possibilities for reconciling and even synthesizing these traditions. It does so by directly addressing three key areas of dispute: the Keynesian stability condition; Harrodian instability; and the question as to whether long-run growth is best conceived in terms of a stable steady state or `corridor instability'. It is shown that reconciliation and even synthesis is possible - the latter producing a `corridor within a corridor' conception of the growth process in which the economy switches between Kaleckian and Harrodian dynamics depending on the extent to which the rate of capacity utilization departs from its normal rate.

Suggested Citation

  • Mark Setterfield, 2021. "Harrodians and Kaleckians: a suggested reconciliation and synthesis," Working Papers 2111, New School for Social Research, Department of Economics, revised Jan 2022.
    • Handle: RePEc:new:wpaper:2111
    as

    Download full text from publisher

    File URL: http://www.economicpolicyresearch.org/econ/2021/NSSR_WP_112021.pdf
    File Function: First version, 2021
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Olivier Allain, 2015. "Tackling the instability of growth: a Kaleckian-Harrodian model with an autonomous expenditure component," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 39(5), pages 1351-1371.
    2. Mark Setterfield, 1999. "Expectations, Path Dependence and Effective Demand: A Macroeconomic Model along Keynesian Lines," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 21(3), pages 479-501, March.
    3. Lavoie, Marc, 1995. "The Kaleckian Model of Growth and Distribution and Its Neo-Ricardian and Neo-Marxian Critiques," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 19(6), pages 789-818, December.
    4. Marc Lavoie, 1996. "Traverse, Hysteresis, and Normal Rates of Capacity Utilization in Kaleckian Models of Growth and Distribution," Review of Radical Political Economics, Union for Radical Political Economics, vol. 28(4), pages 113-147, December.
    5. Neri Salvadori (ed.), 2003. "Old and New Growth Theories," Books, Edward Elgar Publishing, number 2806.
    6. Mark Setterfield, 1997. "Should Economists Dispense with the Notion of Equilibrium?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 20(1), pages 47-76, September.
    7. Peter Skott, 2012. "Theoretical And Empirical Shortcomings Of The Kaleckian Investment Function," Metroeconomica, Wiley Blackwell, vol. 63(1), pages 109-138, February.
    8. Petach, Luke & Tavani, Daniele, 2019. "No one is alone: Strategic complementarities, capacity utilization, growth, and distribution," Structural Change and Economic Dynamics, Elsevier, vol. 50(C), pages 203-215.
    9. Shyam Gouri Suresh & Mark Setterfield, 2015. "Firm performance, macroeconomic conditions, and “animal spirits” in a Post Keynesian model of aggregate fluctuations," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 38(1), pages 38-63, July.
    10. Skott,Peter, 2008. "Conflict and Effective Demand in Economic Growth," Cambridge Books, Cambridge University Press, number 9780521066310.
    11. Mark Setterfield & Joana David Avritzer, 2020. "Hysteresis in the normal rate of capacity utilization: A behavioral explanation," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 898-919, November.
    12. Mario Cassetti, 2006. "A note on the long-run behaviour of Kaleckian models," Review of Political Economy, Taylor & Francis Journals, vol. 18(4), pages 497-508.
    13. Gilberto Tadeu Lima & Mark Setterfield, 2016. "Expectations and Stability in the Kaleckian Growth Model," Working Papers 1602, New School for Social Research, Department of Economics.
    14. Mark Setterfield, 2019. "Long-run variation in capacity utilization in the presence of a fixed normal rate," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(2), pages 443-463.
    15. Kurz, Heinz D, 1990. "Effective Demand, Employment and Capital Utilisation in the Short Run," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(2), pages 205-217, June.
    16. Eric Kemp‐Benedict, 2020. "Convergence of actual, warranted, and natural growth rates in a Kaleckian–Harrodian‐classical model," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 851-881, November.
    17. Mark Setterfield, 2019. "Time variation in the size of the multiplier: a Kalecki–Harrod approach," Review of Keynesian Economics, Edward Elgar Publishing, vol. 7(1), pages 28-42, January.
    18. Florian Botte, 2019. "Estimating normal rates of capacity utilisation and their tolerable ranges: a comment on Mark Setterfield," Post-Print hal-02333910, HAL.
    19. Peter Kriesler & J. W. Nevile, 2012. "Dynamic Keynesian economics: cycling forward with Harrod and Kalecki," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 36(2), pages 405-417.
    20. Amita va Krishna Dutt, 1991. "Expectations and Equilibrium: Implications for Keynes, the Neo-Ricardian Keynesians, and the Post Keynesians," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 14(2), pages 205-224, December.
    21. Reiner Franke, 2020. "An attempt at a reconciliation of the Sraffian and Kaleckian views on desired utilization," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 17(1), pages 61-77, April.
    22. Steven M. Fazzari & Pietro E. Ferri & Edward G. Greenberg & Anna Maria Variato, 2013. "Aggregate demand, instability, and growth," Review of Keynesian Economics, Edward Elgar Publishing, vol. 1(1), pages 1-21, January.
    23. Eckhard Hein & Marc Lavoie & Till van Treeck, 2011. "Some instability puzzles in Kaleckian models of growth and distribution: a critical survey," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 35(3), pages 587-612.
    24. Brian Hartley, 2020. "Corridor stability of the Kaleckian growth model: a Markov-switching approach," Working Papers 2013, New School for Social Research, Department of Economics, revised Nov 2020.
    25. Mark Setterfield, 2000. "Expectations, Endogenous Money, and the Business Cycle: An Exercise in Open Systems Modeling," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 23(1), pages 77-105, September.
    26. Cédric Rogé, 2020. "Harrodian instability in a post‐Keynesian growth and distribution model," Metroeconomica, Wiley Blackwell, vol. 71(1), pages 88-128, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mark Setterfield, 2019. "Tolerable ranges of variation in the rate of capacity utilization and corridor instability: a reply to Florian Botte," Working Papers 1905, New School for Social Research, Department of Economics.
    2. Mark Setterfield & Joana David Avritzer, 2020. "Hysteresis in the normal rate of capacity utilization: A behavioral explanation," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 898-919, November.
    3. Bassi, Federico & Bauermann, Tom & Lang, Dany & Setterfield, Mark, 2022. "Is capacity utilization variable in the long run? An agent-based sectoral approach to modeling hysteresis in the normal rate of capacity utilization," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 196-212.
    4. Eckhard Hein, 2017. "Post-Keynesian macroeconomics since the mid 1990s: main developments," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 131-172, September.
    5. Mark Setterfield & George Wheaton, 2024. "Animal spirits and the Goodwin pattern," Working Papers 2407, New School for Social Research, Department of Economics.
    6. Gahn, Santiago José, 2021. "On the adjustment of capacity utilisation to aggregate demand: Revisiting an old Sraffian critique to the Neo-Kaleckian model," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 325-360.
    7. Florian Botte, 2017. "Estimating normal capacity utilization rates and their tolerable ranges of values: A comment on Setterfield," Post-Print hal-01543643, HAL.
    8. Eckhard Hein, 2019. "Harrodian instability in Kaleckian models and Steindlian solutions," FMM Working Paper 46-2019, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    9. Christian Schoder, 2012. "Effective demand, exogenous normal utilization and endogenous capacity in the long run. Evidence from a CVAR analysis for the US," IMK Working Paper 103-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    10. Eric Kemp‐Benedict, 2020. "Convergence of actual, warranted, and natural growth rates in a Kaleckian–Harrodian‐classical model," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 851-881, November.
    11. Sasaki, Hiroaki, 2012. "Is the long-run equilibrium wage-led or profit-led? A Kaleckian approach," Structural Change and Economic Dynamics, Elsevier, vol. 23(3), pages 231-244.
    12. Christian Schoder, 2012. "Instability, stationary utilization and effective demand: A synthesis of Harrodian and Kaleckian growth theory," IMK Working Paper 104-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    13. Lorenzo Di Domenico, 2021. "Multiplicity and not necessarily heterogeneity: implications for the long-run degree of capacity utilization," Working Papers PKWP2116, Post Keynesian Economics Society (PKES).
    14. Ettore Gallo & Maria Cristina Barbieri Góes, 2023. "Investment, autonomous demand and long-run capacity utilization: an empirical test for the Euro Area," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 40(1), pages 225-255, April.
    15. Marc Lavoie, 2016. "Convergence Towards the Normal Rate of Capacity Utilization in Neo-Kaleckian Models: The Role of Non-Capacity Creating Autonomous Expenditures," Metroeconomica, Wiley Blackwell, vol. 67(1), pages 172-201, February.
    16. Schoder, Christian, 2014. "Instability, stationary utilization and effective demand: A structuralist model of endogenous cycles," Structural Change and Economic Dynamics, Elsevier, vol. 30(C), pages 10-29.
    17. Mark Setterfield, 2019. "Long-run variation in capacity utilization in the presence of a fixed normal rate," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(2), pages 443-463.
    18. Peter Skott, 2018. "Challenges for post-Keynesian macroeconomics," UMASS Amherst Economics Working Papers 2018-03, University of Massachusetts Amherst, Department of Economics.
    19. Christian Schoder, 2012. "Endogenous capital productivity in the Kaleckian growth model. Theory and Evidence," IMK Working Paper 102-2012, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    20. de Oliveira, Guilherme, 2023. "On the utilization controversy in the demand-led growth literature: A quantile unit root approach," Economic Modelling, Elsevier, vol. 126(C).

    More about this item

    Keywords

    Keynesian stability condition; Harrodian instability; corridor instability; shifting equilibrium; Kaleckian pseudo-instability; normal rate of capacity utilization;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:new:wpaper:2111. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Setterfield (email available below). General contact details of provider: https://edirc.repec.org/data/denewus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.