1,720,979 research outputs found
An analysis of the patterns of economic growth in the US
No full textThis article seeks to investigate which demand component led and shaped the growth patterns of the US economy between 1954 and 2020 and comprehensive sub-periods relying on a proper allocation of imports. In doing so, it aims to establish whether the external sector can make a positive contribution to growth even in a context of negative net exports. Finally, it seeks to shed light on the reasons for higher or lower output growth, drawing particular attention to the engines of growth in each historical period. This article takes a novel approach in two ways: (1) it calculates and analyzes the decomposition of the contributions to growth for the US; (2) it divides the analysis into sub-periods and engines of growth, separately analyzing movements in the components of the multiplier, the dynamics of each component’s share with respect to GDP, and their respective growth rates. The empirical results show that the very low growth rates experienced between 2008 and 2020 are mainly explained by a minimal contribution of the government sector accompanied by weak demand from the private sector, highlighting the importance of growth-oriented public policies. These negative results have been only partially compensated by improvements in the external sector
Output determination and autonomous demand multipliers: An empirical investigation for the US economy
No full textThis paper aims to assess whether shocks in demand and its components can affect short-and long-run output dynamics, challenging the macroeconomic literature that relegates its effects to the short run. We apply SVAR modelling to US quarterly data (1954-2020) in order to identify shocks and compute multipliers associated with demand and its autonomous components (i.e. exports, government expenditure, credit-financed consumption, and private residential investment) while controlling for monetary policy. Our findings suggest that: (i) demand produces long-lasting effects on GDP with multipliers greater than one; (ii) multipliers are higher for credit-financed consumption and private residential investment, followed by government expenditure and exports; (iii) monetary policy affects output through residential investment. Our results support those theories suggesting that supply accommodates to demand by varying installed capacity and that monetary policy is ineffective in stimulating economic activity due to the low responsiveness of GDP to interest rate shocks
Investment, autonomous demand and long-run capacity utilization: an empirical test for the Euro Area
No full textThis paper reviews and empirically tests the validity of the Sraffian Supermultiplier model (SSM) and the modified Neo-Kaleckian model after the inclusion of autonomous components of aggregate demand. First, we theoretically assess whether the SSM may constitute a complex variant of the Neo-Kaleckian model. In this sense, it is shown that results compatible with the SSM can be obtained by implementing a set of mechanisms in a modified Neo-Kaleckian model. Second, the paper empirically tests the main implications of the models in the Euro Area, based on Eurostat data. In particular, the discussion outlines the short and long-run relation between autonomous demand and output, by testing cointegration and causality with a VECM model. Moreover, the role accounted by both theories to the rate of capacity utilization is empirically assessed, through a time-series estimation of the Sraffian and Neo-Kaleckian investment functions. While confirming the theoretical relation between autonomous demand and output in the long run, the results also show that capacity utilization still plays a key role in the short-run adjustment mechanism
Teaching heterodox macroeconomics: Some reflections from Macroeconomics after Kalecki and Keynes by Eckhard Hein
Full text linkThis contribution examines recent developments in post-Keynesian macroeconomics teaching through an analysis of five textbooks: Blecker and Setterfield (2019), Hein (2014; 2023), and Lavoie (2014; 2022). The focus is on Hein’s latest book, Macroeconomics after Kalecki and Keynes (2023), which aims to provide a comprehensive and teachable post-Keynesian macroeconomic model, by covering topics such as effective demand, policy coordination, distribution and growth, finance-dominated capitalism, and ecological constraints. The review discusses Hein’s textbook in a comparative way, highlighting points of strength and aspects that should be explored further, particularly (but not related to) the field of climate change and environmental constraints to growth. Overall, it is argued that Hein's book contributes to the literature on post-Keynesian economics and provides a valuable resource for undergraduate and graduate students in the field
Monetary Policy, Income Distribution and Semi-Autonomous Demand in the US
No full textWe empirically explore the role of monetary and distribution shocks on semi-autonomous demand under a supermultiplier framework. We use quarterly data for the United States from 1968 to 2022 and apply a SVAR model to investigate the effect of changes in financial and distributive variables on autonomous expenditure. We find that: (i) the federal funds rate has a negative and statistically significant effect on autonomous expenditure; (ii) a positive shock in the wage share has a negative effect on non-revolving consumer credit and a transitory positive effect on induced consumption; (iii) a positive shock in aggregated autonomous demand has a positive, persistent, and significant effect on induced consumption and, output, as well as on the adjusted wage share; (iv) a positive shock in private residential investment has a positive, persistent and statistically significant effect on other autonomous components of demand and output; (v) while residential investment positively influences consumer credit and durable consumption, the inverse does not hold
The Revival of Industrial Policies in the EU?
No full textThis article provides an in-depth analysis of the evolution and current state of industrial policies in the European Union (EU) from the 1980s to the present day. We specifically focus on the resurgence of interest in such policies from 2020. We argue that industrial policies in the EU during the second half of the 2020s and into the 2030s will differ significantly from previous decades, while acknowledging challenges in fully understanding their scope and implementation. In particular, it is argued that the lack
of a meaningful EU fiscal capacity constitutes the biggest challenge for the design and implementation of effective industrial strategies, which risks exacerbating regional and national disparities in the dual transition
Infection Is the Cycle: Unemployment, Output and Economic Policies in the COVID-19 Pandemic
No full textThis paper seeks to capture the dynamic interaction between the epidemiological evolution of COVID-19 and its effect on the macroeconomy, in absence of widespread vaccination. We do that by building a stylized two-equations dynamical system in the COVID-19 positivity rate and the unemployment rate. The solution of the system makes the case for an endemic equilibrium of COVID-19 infections, thus producing waves in the two variables in the absence of widespread immunity through vaccination. Furthermore, we model the impact of the pandemic-driven unemployment shock on output, showing how the emergence of cyclical downswings could determine a L-shaped recession in the medium run, in absence of adequate stimulus policies. Moreover, we simulate the model, calibrating it for the US. The simulation highlights the effects on unemployment and on overall economic activity produced by recurrent waves of COVID-19, which risk to jeopardize the coming back to the pre-crisis trend in the medium run
The Supermultiplier Model and the Role of Autonomous Demand: An Empirical Test for European Countries
No full textIn recent years, Supermultiplier models have attracted rising attention, highlighting the role of autonomous components of demand in shaping the long-run growth path of the economy. This paper aims to empirically test the implications of this approach in selected European economies, grouped according to the literature on welfare model classification. First, we outline the
short-run adjustments and long-run relations between autonomous demand growth and output by estimating a vector
error-correction model (VECM). Second, we assess if a causal relationship between the variables can be identified by estimating a structural model and computing the orthogonalized impulse response functions, focusing in particular on the effects
of a demand shock on output. The empirical results confirm a positive and significant relation between autonomous demand
and output in the long run for all countries considered. Moreover, we find that the causal direction runs from the former to the
latter, corroborating the idea that autonomous demand shocks permanently affect the growth path of the economies under
scrutiny
‘Original Sin’ in Latin America (2000-2015): Theory, Empirical Assessment and Alternatives
No full textThe matter of the ‘original sin’, the inability to borrow abroad in domestic currency, came to the centre of the academic discussion after the dramatic episodes in Asia, Russia and Latin America. According to this international framework, this paper is an empirical analysis of ‘original sin’ for six Latin American countries based on the index (OSIN3) developed by Haussmann and Panizza (2003). This paper finds that the situation
for some countries have been improving reflecting a reduction of the index. This fact could be related to recent economic policies related to an ‘abstinence’ rather than ‘redemption’, an attitude seen as a response to the debt crisis. Finally, the paper focuses on possible policy alternatives that could be adopted to overcome the ‘original sin’ phenomenon it includes North-South and South-South cooperation and a multilateral arrangement. However, such alternatives are limited to feasibility mainly due to the turbulent political and economic scenario in the region
Distribution, capital intensity and public debt-to-GDP ratio: an input output—stock flow consistent model
No full textThe paper analyzes the relationship between the interest rate and the public debt-to-GDP ratio through the lens of the Classical-Keynesian approach. We focus on the value dimension as a transmission channel of monetary policy, modeling how a change in the interest rate set by the central bank affects the economy’s capital intensity and, in turn, debt ratios. We do so by developing a Stock-Flow Consistent Supermultiplier model (SFC-SM) based on a simplified Input–Output structure of production, showing that the effect of an increase in the interest rate on public debt-to-GDP ratio will depend on the impact exerted by the shock on the capital intensity through changes in relative prices. Lastly, we calibrate the model, showing the possible emergence of reverse capital deepening; past a threshold, any base rate hike produces an increase in the public debt-to-GDP ratio by decreasing the capital intensity of the economy
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