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Chapter 5: Growth, Instability and Cycles: Harrodian and Kaleckian Models of Accumulation and Income Distribution
5 Growth, instability and cycles: Harrodian and Kaleckian models of accumulation and income distribution* Peter Skott 1 Introduction Post-Keynesian theory is sometimes seen as encompassing almost anything “nonmainstream”. Following the seminal contributions by Rowthorn (1981), Dutt (1984) and Taylor (1985), however, Kaleckian models with stable steady-growth paths have come to dominate post-Keynesian and structuralist macroeconomics. These models are characterized by a low sensitivity of accumulation to variations in utilization, and with a given markup, the utilization rate becomes an accommodating variable in both the short and the long run. Thus, the steady-growth value of the utilization rate is not, as in Harrodian or Robinsonian models, tied to a structurally determined desired rate. Instead, shocks to demand (changes in saving rates, for instance) can have large, permanent effects on utilization. A substantial literature discusses the long-run relation between actual and desired utilization rates. Kurz (1986), Committeri (1986), Duménil and Lévy (1993), and Auerbach and Skott (1988) are among those who have faulted Kaleckian models for their failure to ensure that actual utilization and desired utilization coincide in steady growth.1 A Kaleckian response has been articulated by Lavoie (1995, 1996), Amadeo (1986), Dutt (1997), and Lavoie et al. (2004). I find the Kaleckian response unconvincing (see Skott 2008 for details), and in this chapter I shall argue that an alternative Harrodian approach is both promising and analytically tractable. The chapter goes over some of the same ground as Lavoie’s interesting and influential 1995 article, but the conclusions are rather different....
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