Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/197056
Authors: 
Kemp-Benedict, Eric
Ghosh, Emily
Year of Publication: 
2018
Citation: 
[Journal:] Economies [ISSN:] 2227-7099 [Volume:] 6 [Year:] 2018 [Issue:] 1 [Pages:] 1-17
Abstract: 
If the world's countries seriously tackle the climate targets agreed upon in Paris, their citizens are likely to experience substantial changes in production, consumption, and employment. We present a long-run post-Keynesian model for studying the potential implications of a major transition on macroeconomic stability and employment. It is a demand-led model in which firms have considerable but not absolute freedom to administer prices, while household consumption exhibits inertia. Firms continually seek input-saving technological improvements that, in aggregate, tie technological progress to firms' cost structures. Together with firm pricing strategies and wage setting, the productivities of different inputs determine the functional income distribution. Saving and investment, and production and purchase of consumption goods, are undertaken by different economic actors, driven by income and capacity utilization, with the possibility that productive capacity exceeds, or falls short of, effective demand. The model produces business cycles and long waves driven by technological change. We present results for a 'downshifting' scenario in which households voluntarily withdraw labor, and discuss the implications of downshifting for stability, growth, and employment. We contrast the downshifting scenario with ones in which households reduce consumption without withdrawing from the labor pool.
Subjects: 
demand-led growth
downshifting
Kaleckian-Harrodian
post-Keynesian
ecological economics
JEL: 
E11
E12
O41
Q01
Q56
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Article

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