A Post-Keynesian Guide
Chapter 6: The basic Kaleckian distribution and growth models
In this chapter we will develop two versions of a basic Kaleckian distribution and growth model, which will only differ with respect to their investment functions. These models provide the foundations for further extensions in the following chapters of the book, providing models which have been applied in empirical research by several authors. As in the previous chapters, we will make use of equilibrium modelling methods and generate equilibrium growth paths or long-run steady states. This might be considered to contradict Kalecki’s attempts at providing dynamic models of the trade cycle and of cyclical growth. However, as pointed out by Dutt (2011a), this method does not imply that the generated equilibria should be considered as actual states of rest or of tranquillity of the real economy. Steady state growth equilibria are rather theoretical tools of analysis, which are generated by the model holding several parameters and coefficients constant, which may and will change in the real world. Changes in these parameters and coefficients can then be integrated, and the model thus provides the tools to analyse these changes in a systematic way, either by means of treating these changes as exogenous shocks or by means of endogenizing them in a dynamic disequilibrium modelling approach.
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