Inconsistency and over‐determination in neo‐Kaleckian growth models: A note

Abstract

This short note argues that the canonical neo-Kaleckian growth model does not yield a balanced growth path due to the absence of an inbuilt mechanism by which desired and actual rates of capital accumulation are equalized. Introduc- ing non-generating capacity autonomous demand does not solve such inconsistency. Contrary to what Lavoie (2016) claims, we show that the latter is also unable to bring capacity utilization to its normal level. In light of recent contributions (e.g., Nikiforos, 2013, 2016), we suggest that making normal capacity utilization an endogenous variable is an alternative better suited to deal with the issue.