Multiplicity and not necessarily heterogeneity: implications for the long-run degree of capacity utilization

The paper discusses the implications of disaggregation within the post-Keynesian\r\ndebate on the long-run convergence of the degree of capacity utilization toward\r\nthe normal one. The debate is related to the emergence of Harrodian instability\r\ninside multiplier–accelerator models and has been characterized by two “opposite” positions: the supermultiplier (SM) and the neo-Kaleckian approaches. These\r\napproaches solve the instability issue diferently, but both share the postulate that\r\nan equilibrium position is such only if the desired state of frms is realized. In the\r\nlong run, the economy converges toward a fully adjusted position where the realized\r\ndegree of capacity utilization is equal to the normal/desired one. In this paper, we\r\ndevelop an Agent Based—Stock Flow Consistent version of the SM model showing\r\nthat 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\r\ndisplays 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\r\nstate corresponds to a situation where the desired state of agents is not realized and\r\nsingle 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