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Growth and stability in a model with Pasinettian saving behaviour and neoclassical technology

By Joao Ricardo Faria and Joanílio Rodolpho Teixeira

Abstract

We analyse a Kaldor-Pasinetti two-class model of growth and distribution in which fiscal activity is explicitly introduced along the lines of Pasinetti ('Ricardian Debt/Taxation Equivalence in the Kaldor Theory of Profits and Income Distribution', Cambridge Journal of Economics, Vol. 13 (1989), pp. 25-36). Following the approach of Darity ('A Simple Analytics of Neo-Ricardian Growth and Distribution', American Economic Review, Vol. 71 (1981), pp. 978-993) the model is reduced to a dynamic system where the Cambridge equation is one of the possible steady-state solutions. The conditions for its local stability are studied and a numerical example is presented. The anti-dual case is more likely to occur in order to guarantee the local stability of the Cambridge equation

Topics: H
Publisher: BLACKWELL PUBL LTD, 108 COWLEY RD, OXFORD OX4 1JF, OXON, ENGLAND
Year: 1999
DOI identifier: 10.1111/1467-9957.00135
OAI identifier: oai:kar.kent.ac.uk:17321
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