Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/181473
Authors: 
Fazzari, Steven
Ferri, Piero
Variato, AnnaMaria
Year of Publication: 
2018
Series/Report no.: 
FMM Working Paper 15
Abstract: 
This paper presents a "supermultiplier" model in which the growth of autonomous demand (demand independent of the state of the economy) determines the steady-state growth rate of output. With reasonable parameters, endogenous adjustment of labor supply and productivity causes supply to accommodate the demand-led growth path, reconciling Harrod's warranted rate of demand growth with the growth of supply. The model delivers a range of feasible aggregate growth paths and unemployment rates rather than a single "natural rate." The results explain how economies can become trapped with low growth due to weak demand or fiscal austerity and suggest policy responses to "secular stagnation."
Subjects: 
demand-led growth
autonomous demand
supermultiplier
aggregate demand and supply reconciliation
secular stagnation
JEL: 
E12
O40
E32
Document Type: 
Working Paper
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