Schumpeter and Keynes: Economic growth in a super-multiplier model
Önder Nomaler, Danilo Spinola & Bart Verspagen
#2020-049
We present a model of economic growth that is based on Keynesian ideas
(the role of autonomous demand in economic growth) as well as
Schumpeterian notions (technological change). Our model fits in the
Sraffian supermultiplier (SSM) tradition, and we endogenise the growth
rate of autonomous demand, and semi-endogenise productivity growth. The
basic model has a steady state that is consistent with a stable
employment rate. Consumption smoothing (between periods of high and low
employment) by workers is the mechanism that keeps the growing economy
stable. We also introduce a version of the model where the burden for
stabilisation falls upon government fiscal policy. This also yields a
stable growth path, although the parameter restrictions for stability
are more demanding in this case.
Keywords: Economic growth model, Sraffian supermultiplier, Research and
Development (R&D)
JEL Classification: O41, E11, E12, E62