A Dynamic Analysis of Demand and Productivity Growth in a Two-sector Kaleckian Model

Nishi, Hiroshi (2018): A Dynamic Analysis of Demand and Productivity Growth in a Two-sector Kaleckian Model.

Abstract

This study extends a two-sector Kaleckian model of growth and income distribution by incorporating the dynamics of labour productivity growth. The economy is composed of investment goods and consumption goods producing sectors, with the sectoral demand and productivity growth interaction dynamically formalized. The study analyses the conditions for the cyclical demand and productivity growth phenomena in a two-sector economy. The model reveals that each sector may present a different response in capacity utilization rate to a change in sectoral income distribution. These phenomena are specific to two-sector models, and cannot be observed with a conventional aggregate growth model.

• Item Type: MPRA Paper
• Language: English
• Keywords: Kaleckian model, Two-sector economy, Effective demand, Productivity growth
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E25 - Aggregate Factor Income Distribution; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models

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