Kalecki’s Long-Run Theory of Effective Demand: The Trend and Business Cycles

2010 ◽  
pp. 91-128
Author(s):  
Julio G. López ◽  
Michaël Assous
Keyword(s):  
Business Cycles ◽  
Effective Demand ◽  
Long Run ◽  
Run Theory

Economic growth and the growth of effective demand

2019 ◽  
pp. 149-161
Author(s):  
Kazimierz Łaski
Keyword(s):  
Business Cycles ◽  
Raw Materials ◽  
National Income ◽  
Production Capacity ◽  
Productive Capacity ◽  
Effective Demand ◽  
Long Run ◽  
Additional Demand ◽  
Skilled Workforce ◽  
The Moment

With an adequately skilled workforce and a sufficient supply of raw materials and energy, it is investment that allows national income and employment to grow. However, this growth is only potential. If it is to materialize, then effective demand has to expand in step with production capacity. To analyze this growth it is necessary to distinguish between actual investment that creates productive capacity this year, and investment decisions that will result in productive capacity in the future. As investment takes place, additional demand raises output and employment. However, as productive capacity expands, it brings forward the moment when demand starts to lag behind the growth of capacity, and excess capacity starts to depress investment. This causes business cycles. In the long run technological change will affect the trend of growth through successive business cycles.

A Model for the Long-Run Theory of Value

1961 ◽  
Vol 29 (1) ◽  
pp. 51 ◽  
Author(s):  
Peter Newman ◽  
J. N. Wolfe
Keyword(s):  
Long Run ◽  
Theory Of Value ◽  
Run Theory

scholarly journals BUSINESS CYCLE – GROWTH NEXUS: A REVIEW

2015 ◽  
Vol 21 (3) ◽  
pp. 519-538
Author(s):  
Marinko ŠKARE ◽  
Daniel TOMIĆ
Keyword(s):  
Economic Growth ◽  
Business Cycles ◽  
Business Cycle ◽  
Economic Policies ◽  
Empirical Testing ◽  
Long Run ◽  
Cycle Growth ◽  
Complex Process ◽  
Theoretical Reasoning

Frequent reversals in business cycles pose the question whether country can achieve macroeconomic stability and/or economic growth by coordinating its economic policies. Thus, what is the role of economic policy within the short/long run in amplifying or dampening shocks? Business cycle – economic growth relationship is rather ambiguous and has, thus, attracted controversy. In this sense the (dis)belief that there indeed exists a relationship between the economic growth and business cycle, and their long-run convergence brings us to three important hypotheses that: (1) the evaluation of cycle-growth bond is inconclusive, (2) empirical testing of cycle synchronization is exaggerated and (3) the hypothesis of coupling/decoupling is ambiguous and can be misleading. Economic growth is a complex process and cannot be attributed to a single factor of observance hence this essay is just a tool of theoretical reasoning with firm grip on empirical circumstances that lead us to consider some issues that dwell the “growth economists” these days. Our study suggests a conclusion that discussions on the cycle-growth nexus are far from over, revealing us some remarkable confrontations within empirical domain.

scholarly journals On Marshallian theory of demand and short-run equilibrium

2020 ◽  
Author(s):  
William Icefield
Keyword(s):  
Monopolistic Competition ◽  
Effective Demand ◽  
Market Clearing ◽  
Demand Shocks ◽  
Long Run ◽  
Short Run ◽  
Independent Variable ◽  
Demand Effects ◽  
Long Run Equilibrium

Mainstream neoclassical models lack genuine demand effects satisfying the principle of effective demand even with monopolistic competition, without addition of so-called frictions, such as inflexible price. There can only be demand shocks. Price is considered to be an independent variable, instead of quantity. But as Alfred Marshall original envisioned, we can instead think of quantity as an independent variable, along with associated equilibrium convergence via quantity adjustments. This allows us to consider a short-run market-clearing equilibrium with less demand than a long-run equilibrium, in contrast to mainstream models without frictions and shocks, with validation of the principle of effective demand.

scholarly journals Egalitarian Policies and Effective Demand: Considering Balance of Payments (Note 1)

2017 ◽  
Vol 5 (2) ◽  
pp. 89
Author(s):  
Taro Abe
Keyword(s):  
Balance Of Payments ◽  
Capital Movement ◽  
Effective Demand ◽  
Unemployment Compensation ◽  
Long Run ◽  
Short Run

<em>This study examines the effectiveness of redistribution policies considering balance of payments. Unlike </em><em>Bowles (2012) and Abe (2015, 2016), we assume that capital movement is sluggish to consider the </em><em>short-run effects. Results indicate that conventional egalitarian policies such as increasing </em><em>unemployment compensation and strengthening dismissal regulations can be effective, whereas an </em><em>asset-based redistribution such as a decrease in the ratio of monitoring labor cannot be. These results </em><em>contradict Bowles (2012). We need to reevaluate conventional egalitarian policies if the effects of </em><em>effective demand and adjustment of capital continue in the long run.</em>

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