Economic Growth and Development

Trinity College Department of Economics Working Paper No. 14-04

28 Pages Posted: 27 Apr 2014

Date Written: April 25, 2014

Abstract

The historical growth record is reviewed and growth is shown to have resulted in divergence between the incomes of fast growing rich economies and slower growing poorer economies. Supply-led, neoclassical growth is then contrasted with demand-led, Keynesian growth. Three Keynesian growth theories (Harrodian, Kaleckian, and Kaldorian) are outlined and shown to differ according to whether investment spending or export demand is the key “driver” of demand formation and growth. The properties of Keynesian growth are then identified and discussed. These include the relationship between saving behaviour and growth, the effects of income redistribution on growth, the relationship between technical progress and growth, and the interaction of supply and demand in the growth process.

Keywords: Economic growth, divergence, demand-led growth, Keynesian growth theory

JEL Classification: O41, O47, O57

Suggested Citation

Setterfield, Mark, Economic Growth and Development (April 25, 2014). Trinity College Department of Economics Working Paper No. 14-04. Available at SSRN: https://ssrn.com/abstract=2429501 or http://dx.doi.org/10.2139/ssrn.2429501

Mark Setterfield (Contact Author)

New School for Social Research ( email )

6 East 16th Street
New York, NY 10003
United States

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