Harrodian Instability and the ‘Normal Rate’ of Capacity Utilization in Kaleckian Models of Distribution and Growth - A Survey

31 Pages Posted: 10 Jan 2012

See all articles by Eckhard Hein

Eckhard Hein

Berlin School of Economics and Law - Institute for International Political Economy (IPE) Berlin

Marc Lavoie

University of Ottawa - Department of Economics

Till van Treeck

Hans-Boeckler-Stiftung - Macroeconomic Policy Institute (IMK)

Date Written: February 2012

Abstract

Starting from potential Harrodian instability in the Kaleckian distribution and growth model we survey Kaleckian reactions put forward to avoid or to cope with this instability. We show that, contrary to the position taken by the critics of the Kaleckian model, this model is capable of maintaining an endogenous rate of capacity utilization, the paradox of thrift and the paradox of costs in the long run, even if the problem of Harrodian instability arises. We conclude that Kaleckian models are more flexible than their Harrodian and Marxian critics suppose when attacking the simple textbook version.

Suggested Citation

Hein, Eckhard and Lavoie, Marc and van Treeck, Till, Harrodian Instability and the ‘Normal Rate’ of Capacity Utilization in Kaleckian Models of Distribution and Growth - A Survey (February 2012). Metroeconomica, Vol. 63, Issue 1, pp. 139-169, 2012, Available at SSRN: https://ssrn.com/abstract=1982355 or http://dx.doi.org/10.1111/j.1467-999X.2010.04106.x

Eckhard Hein (Contact Author)

Berlin School of Economics and Law - Institute for International Political Economy (IPE) Berlin ( email )

Badensche Straße 52
Berlin, 10825
Germany

Marc Lavoie

University of Ottawa - Department of Economics ( email )

120 University street
Ottawa, Ontario K1N 6N5
Canada

Till Van Treeck

Hans-Boeckler-Stiftung - Macroeconomic Policy Institute (IMK) ( email )

Hans-Böckler-Straße 39
40476 Düsseldorf
Germany

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