Convergence of actual, warranted, and natural growth rates in a Kaleckian-Harrodian model

By Eric Kemp-Benedict

PKES Working Paper 1913

May 2019

This paper describes a hybrid post-Keynesian and classical/neo-Marxian model with a 'center of gravity' where the actual, warranted, and natural growth rates coincide. In the model, investment determines saving in the short run, while investment depends on anticipated demand. The Keynesian stability is assumed not to hold, so the model features short-run Harrodian instability, which is bounded by a ceiling and floor. The resulting Kaleckian-Harrodian model is shown to produce some key stylized facts as long-run tendencies, to exhibit wage-led behavior, and to produce depressions in some circumstances.

Keywords: Kaleckian, Harrodian, classical, neo-Marxian, cycles, technological change

JEL classification: B50 E32 O40