R&D-based Economic Growth in a Supermultiplier Model

Nomaler, Önder and Spinola, Danilo and Verspagen, Bart (2021) R&D-based Economic Growth in a Supermultiplier Model. Structural Change and Economic Dynamics. ISSN 0954-349X

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Abstract

We investigate how economic growth in a demand-driven economy with semi-endogenous productivity growth can be compatible with a stable employment path. Our model uses a Sraffian supermultiplier (SSM), and we endogenize the growth rate of autonomous demand, and semi-endogenize productivity growth. The basic model has a steady state that is consistent with a stable employment rate, and in which the growth rate is determined by R&D expenditures. Consumption smoothing (between periods of high and low employment) by workers is the mechanism that ensures that demand keeps up with productivity growth and that the growing economy is stable. We also introduce a version of the model where the burden for stabilization falls upon government fiscal policy. This also yields a stable growth path, although the parameter restrictions for stability are more demanding in this case.

Item Type: Article
Identification Number: https://doi.org/10.1016/j.strueco.2021.07.002
Date: 3 August 2021
Uncontrolled Keywords: Economic growth model, Sraffian supermultiplier, Research and Development (R&D)
Subjects: L100 Economics
Divisions: Faculty of Business, Law and Social Sciences > Birmingham City Business School > Department of Accounting, Finance and Economics
Faculty of Business, Law and Social Sciences > Birmingham City Business School > Centre for Applied Finance and Economics
Depositing User: Danilo Sartorello Spinola
Date Deposited: 16 Jul 2021 10:37
Last Modified: 13 Aug 2021 10:05
URI: http://www.open-access.bcu.ac.uk/id/eprint/11938

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