The paper is a contribution to the analysis of the growth process within industrial market economies. It examines the connection between growth and the composition of demand, in particular the Consumption-Growth relationship. The focus is not on the trade-off between consumption and growth but on the positive feedback between them which, via changes in the composition of demand, shifts the constraint along which the trade-off operates. The starting point of the theory of the Consumption-Growth relationship put forward here is the early Keynesian growth theory which sought to extend the principle of effective demand to the long-run. We attempt to establish a systemic link between the transformation of consumption patterns and the principle of effective demand, thus contributing to a long-run theory of effective demand.
Towards a Theory of the Consumption-Growth Relationship
GUALERZI, DAVIDE
2012
Abstract
The paper is a contribution to the analysis of the growth process within industrial market economies. It examines the connection between growth and the composition of demand, in particular the Consumption-Growth relationship. The focus is not on the trade-off between consumption and growth but on the positive feedback between them which, via changes in the composition of demand, shifts the constraint along which the trade-off operates. The starting point of the theory of the Consumption-Growth relationship put forward here is the early Keynesian growth theory which sought to extend the principle of effective demand to the long-run. We attempt to establish a systemic link between the transformation of consumption patterns and the principle of effective demand, thus contributing to a long-run theory of effective demand.
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