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- Title
Harrod's long‐range capital outlay as a stabilizer of Harrodian instability.
- Authors
Franke, Reiner
- Abstract
Drawing on Harrod, Kalecki and Kaldor, this paper seeks to revive the view that ceteris paribus firms reduce investment if they have already built up high capacities relative to their assessment of the normal potential of their markets. This reaction introduces a fundamental stabilizing mechanism into the economy. The paper adapts the idea to a growth context and applies it to the neo‐Kaleckian baseline model with its Harrodian instability. It demonstrates that, in principle, a sufficiently strong feedback could stabilize the steady state.
- Subjects
BUSINESS enterprises; INVESTMENTS; ECONOMIC development; KALECKIAN Model of Growth &; Distribution; ECONOMIC policy
- Publication
Metroeconomica, 2019, Vol 70, Issue 2, p302
- ISSN
0026-1386
- Publication type
Article
- DOI
10.1111/meca.12205