This paper moves in a theoretical context in which the level of economic activity is dependent on aggregate demand in both the long and the short period. It shows that given two simple hypotheses, the economy will exhibit a tendency to grow independently of any increase in the average level of ongoing investment (or any other type of ‘autonomous’ demand) over time. The two hypotheses are (a) that investment oscillates over time and (b) that the community’s marginal propensity to consume is lower when income contracts in slumps than when it increases in booms. This points to a source of growth that is as endogenous to the system, as trade cycles are.
Garegnani, P., Trezzini, A. (2010). Cycles and Growth: A Source of Demand-Driven Endogenous Growth. REVIEW OF POLITICAL ECONOMY, 22(1), 119-125 [10.1080/09538250903392119].
Cycles and Growth: A Source of Demand-Driven Endogenous Growth
TREZZINI, ATTILIO
2010-01-01
Abstract
This paper moves in a theoretical context in which the level of economic activity is dependent on aggregate demand in both the long and the short period. It shows that given two simple hypotheses, the economy will exhibit a tendency to grow independently of any increase in the average level of ongoing investment (or any other type of ‘autonomous’ demand) over time. The two hypotheses are (a) that investment oscillates over time and (b) that the community’s marginal propensity to consume is lower when income contracts in slumps than when it increases in booms. This points to a source of growth that is as endogenous to the system, as trade cycles are.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.