Autonomous demand, multiple equilibria and unemployment dynamics.
JOURNAL OF ECONOMIC INTERACTION AND COORDINATION 2020;
17:209-223. [PMID:
33163115 PMCID:
PMC7602778 DOI:
10.1007/s11403-020-00306-1]
[Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [Grants] [Track Full Text] [Figures] [Subscribe] [Scholar Register] [Received: 02/24/2020] [Accepted: 10/10/2020] [Indexed: 06/11/2023]
Abstract
The paper presents a medium-run growth model driven by autonomous demand, where aggregate demand and supply interact and unemployment is present and plays different roles. In particular, it generates a feedback from supply to aggregate demand rooted in the presence of heterogeneous consumers and an uncertain environment. Two are the main consequences of this approach. The first is that multiple equilibria can be generated. The second is that equilibria may have different stability properties. In this perspective, growth becomes a dynamic process where initial conditions matter and history plays an important role.
Collapse