TY - JOUR
T1 - Multiplicity and not necessarily heterogeneity: implications for the long-run degree of capacity utilization
AU - Di Domenico, Lorenzo
PY - 2023
Y1 - 2023
N2 - The paper discusses the implications of disaggregation within the post-Keynesian
debate on the long-run convergence of the degree of capacity utilization toward
the normal one. The debate is related to the emergence of Harrodian instability
inside multiplier–accelerator models and has been characterized by two “opposite” positions: the supermultiplier (SM) and the neo-Kaleckian approaches. These
approaches solve the instability issue diferently, but both share the postulate that
an equilibrium position is such only if the desired state of frms is realized. In the
long run, the economy converges toward a fully adjusted position where the realized
degree of capacity utilization is equal to the normal/desired one. In this paper, we
develop an Agent Based—Stock Flow Consistent version of the SM model showing
that once multiplier–accelerator mechanisms are explicitly reproduced in a multifrm economy, the accumulation process can be stable without requiring any convergence between the actual and normal rate. Conversely, the modeled economy
displays two emergent properties: the fuctuations of the business cycle arise endogenously, and the long-run aggregate degree of capacity utilization persistently fuctuates around a level lower than the normal one. To this extent, the quasi-steady
state corresponds to a situation where the desired state of agents is not realized and
single elements are not in equilibrium, but the aggregate is. Finally, we compare outcomes produced from the model according to diferent scenarios on frms’ heterogeneity and network symmetries
AB - The paper discusses the implications of disaggregation within the post-Keynesian
debate on the long-run convergence of the degree of capacity utilization toward
the normal one. The debate is related to the emergence of Harrodian instability
inside multiplier–accelerator models and has been characterized by two “opposite” positions: the supermultiplier (SM) and the neo-Kaleckian approaches. These
approaches solve the instability issue diferently, but both share the postulate that
an equilibrium position is such only if the desired state of frms is realized. In the
long run, the economy converges toward a fully adjusted position where the realized
degree of capacity utilization is equal to the normal/desired one. In this paper, we
develop an Agent Based—Stock Flow Consistent version of the SM model showing
that once multiplier–accelerator mechanisms are explicitly reproduced in a multifrm economy, the accumulation process can be stable without requiring any convergence between the actual and normal rate. Conversely, the modeled economy
displays two emergent properties: the fuctuations of the business cycle arise endogenously, and the long-run aggregate degree of capacity utilization persistently fuctuates around a level lower than the normal one. To this extent, the quasi-steady
state corresponds to a situation where the desired state of agents is not realized and
single elements are not in equilibrium, but the aggregate is. Finally, we compare outcomes produced from the model according to diferent scenarios on frms’ heterogeneity and network symmetries
KW - Agent Based - Stock Flow Consistent models
KW - Capacity utilization
KW - Harrodian instability
KW - Out-of-equilibrium
KW - Agent Based - Stock Flow Consistent models
KW - Capacity utilization
KW - Harrodian instability
KW - Out-of-equilibrium
UR - http://hdl.handle.net/10807/296016
U2 - 10.1007/s11403-023-00390-z
DO - 10.1007/s11403-023-00390-z
M3 - Article
SN - 1860-711X
VL - 18
SP - 835
EP - 877
JO - Journal of Economic Interaction and Coordination
JF - Journal of Economic Interaction and Coordination
ER -