R&D-based economic growth in a supermultiplier model

Önder Nomaler, Danilo Spinola, Bart Verspagen*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    14 Citations (SciVal)

    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.
    Original languageEnglish
    Pages (from-to)1-19
    Number of pages19
    JournalStructural Change and Economic Dynamics
    Volume59
    DOIs
    Publication statusPublished (VoR) - 3 Aug 2021

    Keywords

    • Economic growth model
    • Research and Development (R&D)
    • Sraffian supermultiplier

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