Economics Department Working Paper Series
Working Paper Number
2016-16
Publication Date
2016
Abstract
A recent literature introduces autonomous demand as the driver of long-run economic growth and as a stabilizing force that tames Harrodian instability. The argument is unconvincing. The stabilizing effect is modest for plausible parameter values and, more importantly, it is questionable whether any components of aggregate demand can be viewed as autonomous in the long run. By contrast, models that include the supply side (the labor market) and/or economic policy can address Harrodian instability and produce level and growth effects that resemble those derived in the literature on autonomous demand.
DOI
https://doi.org/10.7275/9498515
License
UMass Amherst Open Access Policy
Recommended Citation
Skott, Peter, "Autonomous demand, Harrodian instability and the supply side" (2016). Department of Economics Working Paper Series. 215.
https://doi.org/10.7275/9498515