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An input-output multiplier-accelerator growth model.

University of Castilla La Mancha. Albacete (Spain)
nternational Con!erence on nput-Output "echni#ue$
%ontreal& Octo'er 1(-1)& *((*.
#conomic $ro%th has been !s!ally analy&ed from a macroeconomic standpoint. 'his may
be an acceptable (first appro)imation*+ very !sef!l+ indeed+ for didactical p!rposes. ,!t it
is not the most convenient to !nderstand the historical process of economic $ro%th that
!s!ally is propelled by specific ind!stries and conveys str!ct!ral chan$es. A social
acco!ntin$ matri)+ as the one %e develop in section 1+ provides the proper base for $ro%th
analysis. A second trait of the most pop!lar models of $ro%th is their s!pply-side
orientation. 'he st!dy of s!pply is certainly necessary to !nderstand the limits of the
economy and certain e-!ilibri!m conditions+ as %e shall ill!strate in section 2 in the revie%
of von .e!mann/s model. 0et+ if capitalism is a demand-constrained system (as 1eynes
and 1alec2i ar$!ed)+ economic $ro%th sho!ld be approached from the demand side+
distin$!ishin$ bet%een a!tonomo!s and ind!ced demand. 3n a Sch!mpeterian fashion+
a!tonomo!s demand can be related to the la!nchin$ of innovative firms into ne% prod!cts
and mar2ets. 3n their e)pansion these firms p!ll an ind!ced demand of cons!mption and
capital $oods. 'he constr!ction of a disa$$re$ated m!ltiplier-accelerator in section 3 %ill
stand probably as the main practical contrib!tion of o!r paper.
Key words: Economic growth, input-output analysis, social accounting matrices,
disaggregated multiplier, disaggregated accelerator.
De Juan: A disaggregated multiplier-accelerator model of growth.
1. ntroduction, a SA% to account !or growth.
#conomic $ro%th has been !s!ally analy&ed from a macroeconomic standpoint.
'his may be an acceptable (first appro)imation*+ very !sef!l+ indeed+ for didactical
p!rposes. ,!t it is not the most convenient to !nderstand the historical process of
economic $ro%th that !s!ally is propelled by specific ind!stries and conveys str!ct!ral
chan$es. 3n this section %e shall present the basic traits of a social acco!ntin$ matri)
(SAM) s!itable for the analysis of $ro%th.
.ational acco!nts and inp!t o!tp!t tables reprod!ce -!ite %ell the classical
approach to the economy. 'he #conomics of Adam Smith and 4avid 5icardo p!rported to
analy&e the process of prod!ction+ distrib!tion and destination of the s!rpl!s (net final
prod!ct+ val!e added or income). 'he three spheres are inter%oven. 6rod!ctivity sets a
limit to s!rpl!s or income $eneration. 4istrib!tion of this income bet%een %a$es and
profits infl!ences the e)pendit!re in cons!mption and investment. 7ro%th is the o!tcome
of investment.
8!r first proposal is to maintain this (classical str!ct!re* of national acco!nts in the
constr!ction of a SAM. 9or a closed economy+ o!r SAM %ill e)hibit the three bloc2s of
table 1.
'he first one sho%s ho% prod!ction is $enerated and ho% it is distrib!ted
bet%een intermediate cons!mption+ final cons!mption and investment. 'he balance is the
val!e added or primary incomes. 'he second dia$onal bloc2 ('r) acco!nts for
redistrib!tion that allo%s to pass from primary incomes to disposable incomes. A part of
disposable income %ill finance final cons!mption+ the rest is defined as savin$s. 'o
finance investment (o!r third hori&ontal bloc2)+ the ind!stry may co!nt %ith firms/ o%n
savin$s+ ho!seholds/ savin$s and capital transfers ('r-2). 'he last dia$onal bloc2 (99)
s!mmari&es financial acco!nts+ i.e. the flo%s of finance+ $enerally intermediated by
financial a$ents. Addin$ a s!bscript %o!ld allo% !s to 2no% the specific financial
instr!ment: deposits+ credits+ bonds+ or shares.
'he advanta$e of a SAM over national acco!nts and 3-8 tables is that it provides
more detail on economic a$ents and their relationships. Let !s $ive some hints of the detail
convenient for a model of $ro%th. 9ollo%in$ the traditional methodolo$y %e shall
distin$!ish bet%een activities+ factors and instit!tions. 3n t!rn+ instit!tions of the national
economy are s!bdivided in non financial corporations+ financial instit!tions+ ho!seholds
and $overnment.
(:) Activities as industries producing goods. ;e identify ind!stries %ith $oods. 'his
ass!mption does not deny the possibility of oint prod!ction. 3t simply implies the
possibility to obtain a symmetric matri) for interind!stry transactions (T+ in table 1)
%here the n!mber of col!mns (ind!stries) coincides %ith the n!mber of ro%s ($oods).
4isa$$re$ation by ind!stries sho!ld be as lar$e as possible. At least one sho!ld
separate (a) intermediate $oods accordin$ to its role in prod!ction (ener$y+ ra%
materials+ ind!strial $oods+ services to enterprises<)= (b) final cons!mption $oods
'o simplify o!r e)position %e shall refer to a closed economy. 'he introd!ction of the (rest of the %orld*
sector %o!ld re-!ire simply the addition of a ne% col!mn and ro%.
De Juan: A disaggregated multiplier-accelerator model of growth.
accordin$ to their income elasticity (ordinary $oods and services= l!)!ry $oods and
services)= (c) fi)ed capital $oods by type (str!ct!res+ e-!ipment and vehicles for
ind!stry)= (d) collective services provided by $overnment.
(>) Factors of production and distribution of income. 3n o!r model of $ro%th (that has a
Classical inspiration+ still alive in national acco!ntin$ methodolo$y) labor is the only
factor of prod!ction+ properly spea2in$. 3t receives incomes accordin$ to the %a$e
stip!lated in labor contract. 'he rest of val!e added constit!tes an (operatin$ s!rpl!s*
that belon$s to firms !ntil it is (redistrib!ted* in ta)es+ interest payments+ rents and
dividends. ;or2in$ %ith a SAM %e co!ld introd!ce different types of labor each one
receivin$ a specific 2ind of income. 'o red!ce comple)ity+ %e propose to refer !st to
%a$es that are redistrib!ted amon$ ho!seholds classified accordin$ to the main so!rce
of income. At the same time+ %e introd!ce a matri) of labor/s flo%s ?L@ %ith so many
ro%s as types of labor (non -!alified+ -!alified+ self-employed<) and so many ro%s as
(A) Institutions and expenditures.
a. Non financial corporations firms or enterprises !"#. 'he first possibility
%o!ld be to identify them %ith ind!stries. 'his is the reason %hy in table 1 %e !se
E both for ind!stries and enterprises. Another possibility+ more !sef!l for certain
p!rposes+ is to separate firms accordin$ to si&e andBor o%nership (local+ national or
b. Financial institutions. 'he 2ey distinction separates (monetary financial
instit!tions* (the ban2in$ sector) and (non-monetary financial instit!tions* (m!t!al
and pension f!nds). 'o abrid$e %e shall refer to both as B.
c. $ouse%olds. 9or o!r p!rposes it is convenient to differentiate ho!seholds accordin$
to their e)pendit!re patterns. H1 stands for ho!seholds of non -!alified %or2ers+
%hose income is rather lo% and devoted entirely to cons!mption. H2: ho!seholds of
-!alified %or2ers %ith medi!m incomes+ most of them cons!med in a bas2et that
incl!des l!)!ry $oods. H3: ho!seholds of mana$ers+ self-employed+ property income
recipients= a s!bstantial part of s!ch incomes is s!pposed to be saved= in their
cons!mption bas2et+ l!)!ry $oods are -!ite important. Hp: ho!seholds of pensioners
and other transfers recipients+ %hose e)pendit!re patters are similar to C:.
d. &overnment. 'he !s!al convention is that it (cons!mes* the ($eneral services*
provided by a special ind!stry identified %ith $overnment. ,y means of ta)es and
transfers+ it pays a 2ey role in the redistrib!tion of income.
So far %e have $athered information abo!t the flo%s of prod!ction+ distrib!tion and
e)pendit!res. A complete acco!nt sho!ld provide information abo!t the funds or stoc's
that ma2e possible s!ch flo%s. 'his information co!ld be $athered by means of satellite
(. )opulation and %uman capital. Statistics of total and active pop!lation+ classified by
the level of ed!cation are very helpf!l. Comparin$ them %ith the matri) of act!al labor
flo%s (L) %e can fi$!re o!t str!ct!ral !nemployment and possible bottlenec2s+ as %ell.
3n $eneral+ f!ll employment is not a cr!cial constraint in o!r classical model of $ro%th+
De Juan: A disaggregated multiplier-accelerator model of growth.
since the n!mber of ho!rs can increase dramatically as2in$ for additional ho!rs or
allo%in$ emi$rants of third %orld co!ntries to enter into o!r labor mar2et.

*. )%ysical capital. 'he stoc2s of physical capital are re$istered in a matri) ?K@ %ith so
many col!mns as ind!stries and so many ro%s as capital $oods. 'he basic capital $oods
are: str!ct!res+ e-!ipment and ind!strial vehicles.
'his matri)+ %hen presented in the
form of coefficients ?'@+ %ill play an important role in the e)planation of investment and
the limits of $ro%th.
+. Natural resources. 3n the comp!tation of net prod!ct+ the nat!ral reso!rces !sed !p in
the process of prod!ction are not disco!nted. 'his is an important shortcomin$ of
national acco!nts. 3ts sol!tion re-!ires+ to be$in %ith+ a balance of nat!ral reso!rces+
and some meas!res of their cons!mption or deteriorations in the prod!ction of each
ind!stry. ;ith s!ch information+ %e can fi$!re o!t %hether the act!al path of $ro%th is
s!stainable or not. 3n o!r model %e ass!me it is for three complementary reasons: (a)
%e analy&e a rather short period of time (: to :D years)= (b) %e are considerin$ the
act!al rates of $ro%th that are rather lo% (D to EF)= (c) %e allo% for technical chan$e
that+ !p to a certain e)tent+ tries to economi&e the reso!rces presentin$ problems of
,. Financial balances. 9inance is a necessary part of the prod!ction process+ since firms
have to pay p!rchases and %a$es before the $oods are sold. 9inancial assets are
contin!o!sly created (iss!ed) and destroyed (repaid). .ot%ithstandin$+ at any moment
%e can present the balance of financial assets in circ!lation. 'hey are traded in the
financial mar2ets+ %hose development may help or impair the process of prod!ction and
-able (.
4epreciation of capital is a diffic!lt iss!e. 'he best acco!nt %o!ld differentiate capital $oods by type and
a$e+ !sin$ the scheme of (oint prod!ction* (La$er+ :GGH). A second-best acco!nt s!pposes that capital $oods
are repaired contin!o!sly so that their prod!ction capabilities are maintained d!rin$ a certain period. 'his
period differs for each type of capital item and for the partic!lar rate of obsolescence of each ind!stry. 3n this
paper+ %e ass!me that depreciation allo%ances have been already introd!ced in the transaction matri)+ T. 3f
so the (operatin$ s!rpl!s* refers to (net profits*+ %hile (fi)ed capital formation* refers to (net investment*.
De Juan: A disaggregated multiplier-accelerator model of growth.
*. Suppl- and demand con$trained $-$tem$. .on Neumann/$ versus
0e-ne$ian/$ model$ o! growth.
1ornai (:GHG) confronts s!pply or reso!rce - constrained systems versus demand
-constrained systems. Socialist economies %o!ld belon$ to the first $ro!p= capitalist
economies to the second. Under socialism+ firms try to $ro% as far as possible to f!lfill the
ambitio!s plans of $overnment. Unfort!nately they are -!ite often impaired by
bottlenec2s. Capitalist firms+ on the contrary+ do not prod!ce as m!ch as their capacity
%o!ld allo%+ b!t as m!ch as they e)pect to sell at (normal prices*= at the same time+
demand e)pectations are fi$!red o!t in a conservative mood+ since the ris2 of ban2r!ptcy is
hi$h. Act!ally+ this is nothin$ b!t the principle o eective demand en!nciated by 1eynes
and 1alec2i in the thirties. A realistic model of $ro%th for a capitalist economy sho!ld be
based on this principle. 0et+ s!pply side models as the one proposed by Jon .e!mann in
:GAK accomplish an important f!nction: they inform abo!t the limits of the model and
certain e-!ilibri!m conditions. Let !s start by revie%in$ this model.
a1 .on Neumann/$ $uppl--$ide model.
Jon .e!mann %as interested in findin$ the ma)im!m rate of $ro%th correspondin$
to a $iven technolo$y
. ;a$es and cons!mption are set e-!al to the s!bsistence level and
introd!ced in the interind!stry transaction matri) as any intermediate inp!t. 3n igure 2, %e
%rite T!+ instead of T+ to remind !s that it incl!des somethin$ else. 9rom T! %e derive the
traditional coefficient matri) ("!):

= # T "
Analy&in$ the ei$enval!es and ei$envectors of matri) "! %e can obtain val!able
information abo!t the limits and conditions of $ro%th..
:. 'he inverse of the ma)im!m ei$enval!e of "! coincides %ith the ma)im!m rate of
profit and the ma)im!m rate of $ro%th.
g r L
L = =

>. 'he ri$ht - hand ei$envector of "! stands for a vector of -!antities indicatin$ the o!tp!t
composition that allo%s the system to e)pand at the ma)im!m speed (
) .

A. 'he left hand ei$envector of "! stands for the vector of prices that allo%s the firms in
each ind!stry to obtain the ma)im!m rate of profit
) L (r
and to finance their o%n
e)pansion at the ma)im!m rate (
-able *
Jon .e!mann/s contrib!tion to $ro%th theory is impressive. 3t %o!ld seem
impossible to reveal so many secrets concernin$ prod!ction and $ro%th in so fe% pa$esO
As a matter of fact+ he admits different technolo$ies for the prod!ction of any prod!ct+ so his first step is the
choice of techni-!e. 3n o!r simplified presentation %e ass!me that the best techni-!e is already 2no%n.
Another simplifyin$ ass!mption of the a!thor is that there is no fi)ed capital. 3n o!r model+ %here there is
fi)ed capital+ the 2ey matri) %o!ld not be the matri) of intermediate coefficients+ b!t the matri) of direct and
indirect fi)ed capital coefficients.
'he condition is that the rate of s!rpl!s be !niform for any prod!ct. 'he rate of s!rpl!s is defined by the
follo%in$ ratio: s!rpl!s of prod!ct i B amo!nt of i !sed in the %hole system as an inp!t.
De Juan: A disaggregated multiplier-accelerator model of growth.
8f co!rse+ %e have to be conscio!s of the meanin$ of the ass!mptions and the limitations
concernin$ the applicability of the model.
:) $ages and consumption are reduced at the subsistence level. 'his allo%s Jon .emann
to obtain the ma%imum rate of $ro%th for a $iven techni-!e. 'here is no problem to fi)
%a$es and cons!mption at the (historical level*. 'hen %e sho!ld obtain the potential
rate of $ro%th correspondin$ to a $iven technolo$y and cons!mption patterns+ as
Carrod did in :GAG for the a$$re$ate economy.
>) "ll the wages, and only wages, are consumed. 'he removal of this ass!mption %o!ld
destroy some ele$ant properties of the model b!t not the content. 'he rate of profit
%o!ld not lon$er coincide %ith the rate of $ro%th. 0et %e co!ld relate both of them by
means of the Cambrid$e e-!ation proposed by 1aldor (:GEP).
A) &roits are entirely and automatically saved and invested. 'his i$nores the problem of
effective demand and renders the model !seless to analy&e the act!al dynamics of
capitalism. 9irms do not prod!ce al%ays at f!ll capacity. .either do they
systematically invest the savin$s correspondin$ to f!ll capacity income.
I) "ggregate demand reduces itsel to induced consumption and induced investment.
'here is no room for a vector of proper a!tonomo!s demand that %o!ld allo% !s to
identify the (locomotives* of the system. 'here is no room for the str!ct!ral chan$es
that characteri&ed the act!al path of capitalist economies. 4espite bein$ a disa$$re$ated
model+ $ro%th is harmonic.
3n o!r opinion+ the practical lesson %e can derive from the von .e!mann/s model is
that e-!ilibri!m prices are embedded in the very str!ct!re of prod!ction. Sraffa (:GPD) p!t
the iss!e in a more clear %ay. 3n a capitalist competitive economy+ the prices of prod!ction
are determined by technolo$y and the real %a$e. 'hey are the prices than ens!re a !niform
rate of profit for the representative firms of all ind!stries. 'hey are the prices that play as
$ravity centers of mar2et prices: e)cesses of demand (at s!ch prices) call for -!antity
ad!stments. 4eviations are possible b!t they are rather a short r!n phenomenon in
ind!stries prod!cin$ perishable $oods. 'hese ideas provide a firm base for b!ildin$ !p a
m!ltiplier-accelerator model %here firms ad!st to chan$es in demand via -!antities+
instead of prices.
'1 nput-output demand 2 $ide model$.
Most inp!t-o!tp!t models can be characteri&ed as demand-side. 'o be$in %ith+ the
traditional (inverse of Leontief* is nothin$ b!t a technical m!ltiplier that allo%s !s to pass
from the vector of final demand to the vector of total o!tp!t. 3n the follo%in$ form!la #
stands for the col!mn vector of total prod!ction= d for the col!mn vector of final demand
that incl!des final cons!mption+ investment+ real p!blic e)pendit!re and e)ports= and " for
the matri) of technical coefficients:
?A@ [ ] d " ' # N
= .
'he traditional inp!t o!tp!t m!ltiplier endo$enei&es cons!mption e)pendit!res
addin$ a ne% col!mn (the cons!mption vector) and a ne% ro% (incomes devoted to
cons!mption). 'he (interind!stry transaction matri)* becomes T
+ and the matri) of
De Juan: A disaggregated multiplier-accelerator model of growth.
coefficients+ "
. 'otal o!tp!t %ill be a m!ltiple of a!tonomo!s demand (da) that is
s!pposed to incl!de investment+ real p!blic e)pendit!re and e)ports.
?I@ [ ]
d N A - 3 -
'he m!ltiplier derived from a SAM str!ct!re (after the seminal paper by 6yatt and
5o!nd+ :GHG) follo%s the same analytical scheme+ %ith the advanta$es that it provides
more detailed information and it can be bro2en do%n into several components+ sho%in$ the
transmission mechanism from prod!ction to incomes and to e)pendit!res.
advanta$es are also present in o!r model+ since it is also derived from a SAM. 3ts
contrib!tion is that+ by endo$enei&in$ a part of investment+ it yields a more po%erf!l
m!ltiplier+ a m!ltiplier able to e)plain more %ith less.
'he novelties of the model are
ill!strated in table 3 and can be s!mmari&ed in the follo%in$ points.
-able +
(:) 'he matri) of a!tonomo!s demand ()) is defined in a more strict sense. 3t incl!des+ as
!s!al+ e)ports and real p!blic e)pendit!res. ,!t contrary to the traditional models+ it
does not incl!de the part of investment aimed at e)pandin$ prod!ctive capacity. 8nly
t%o types of investment are considered (proper a!tonomo!s demand*. 'he first is
(residential investment* by ho!seholds. 'he second can be termed (moderni&ation
investment* and refers to the introd!ction by firms of ne% prod!cts. 3n empirical
st!dies %e need a more precise definition. 8!r proposal is to incl!de as (proper
a!tonomo!s demand* those $oods %hose rate of $ro%th is clearly different from
(>) 3nd!ced cons!mption (*!) refers to the incomes+ that $ro% pari passu %ith prod!ction
and are systematically cons!med. 'he %ay to endo$enei&e cons!mption in order to
obtain the multiplier %ill be e)plained in the section 3.
(A) 3nd!ced investment or acc!m!lation ('!) refers to the prod!ction of ne% capital $oods
in order to e)pand capacity pari passu %ith demand.. 'his is the acceleration principle
that %ill also be e)plained in section 3. Cere %e shall simply %arn+ that the
(ind!cement* in investment is a m!ch more fra$ile one. Savin$s %ill be acc!m!lated
only if entreprene!rs contin!e to be optimistic abo!t demand e)pansion.
(I) 8!r m!ltiplier-accelerator appears as a compact matri): ?'-"
. Contrary to traditional
inp!t-o!tp!t m!ltipliers+ %e do not add ne% col!mns and ro%s to the interind!stry
matri) T. ;e simple enlar$e the fi$!res in each cell by addin$ !p: (a) intermediate
cons!mption= (b) fi)ed capital cons!mption= (c) ind!ced final cons!mption= (d) ind!ced
investment. ,y doin$ so %e obtain the matri) of -!antities T
+ and the correspondin$
matri) of coefficients+ "
(E) 'his m!ltiplier-accelerator allo%s !s to comp!te the increase in total prod!ction (-)+ net
income (0) or employment (L) associated to an increase in proper a!tonomo!s demand
(Q). 'he interpretation is the conventional one. 3n the simple 1eynesian or inp!t-
'he lin2 bet%een income of different social $ro!ps and cons!mption %as introd!ced in 1alec2i/s
(a$$re$ate) m!ltiplier and developed in Miya&a%a Masse$!i Rs (disa$$re$ated) m!ltiplier (Miya&a%a S
Masse$!i+ :GPA). 1!r& (:GKE) derives a m!ltiplier that relates prod!ction+ distrib!tion and demand.
Leontief/s (dynamic inverse* (:GHD) is the first attempt to endo$enei&e investment+ altho!$h by a different
method and for different p!rposes. Ce ta2es final cons!mption at year t as a!tonomo!s demand or (s!rpl!s*.
Ce then derives the stoc2s of capital $oods necessary to prod!ce at t s!ch (s!rpl!s*+ and the path of formation
of the capital stoc2 d!rin$ the precedin$ years.
De Juan: A disaggregated multiplier-accelerator model of growth.
o!tp!t m!ltiplier+ an increase in investment (i.e. the prod!ction of ne% machines to
enlar$e capacity) ca!ses an increase in o!tp!t and incomes !ntil the savin$s stemmin$
from them e-!al in val!e the ne% investments. 3n o!r m!ltiplier-accelerator model+ an
increase in the prod!ction of the $oods considered (proper a!tonomo!s demand* %ill
ca!se an increase in prod!ction !ntil the a!tonomo!s incomes stemmin$ from it e-!als
in val!e the increase in demand+ i.e. !ntil TU V TQ.
#-!ations ?Ea@ and ?Eb@ provide an al$ebraic s!mmary of the precedin$ ideas:
[ ] ) L N (bein$ N
: W W

= =
+ = + + + =
# T " ) " ' #
) T ) ' * T #
[ ]
[ ]
[ ] ) l
) v

N A - 3 N L
N A - 3 N L 0
N A - 3 -
vL is a dia$onal matri) %hose terms are the ratios of val!e added in the total o!tp!t of any
ind!stry. l is a rectan$!lar matri) that sho%s the labor coefficients by types of labor and
c1 3raphical illu$tration$.
Let !s concl!de the section %ith some $raphical ill!strations. ,igure 1 presents the
dynamics of a s!pply constrained system as it is the case of socialist economies and te)t-
boo2 capitalist economies %here the problem of effective demand is ass!med a%ay. At
time (D* the stoc2 of acc!m!lated capital amo!nts to 1o. 7iven technical conditions (the
capital B labor ratio V and the capital B o!tp!t ratio V 2) firms %ill employ Lo %or2ers and
%ill prod!ce a level of o!tp!t 0o. A part of it %ill be cons!med (CVc0+ bein$ c the
propensity to cons!me that !nder the ass!mption that %a$es and only %a$es are cons!med
coincides %ith the ratio %B). 'he remainin$ part stands for profits that are s!pposed to be
saved and invested. At the be$innin$ of year :+ the stoc2 of capital %o!ld be
1:V1oX3oV1oXSo. 9ollo%in$ the scheme+ year after year+ the economy %o!ld e)perience a
harmonic+ efficient and re$!lar $ro%th at the potential rate.
Figure (
,igure 2 ill!strates the path of $ro%th in a demand constrained system as capitalism
is s!pposed to be. 'he independent variable is a!tonomo!s demand. Let !s s!ppose that
at year (D* a!tonomo!s demand amo!nts to "o and it is $ro%in$ at g-. 'o prod!ce s!ch
$oods firms need to hire ne% %or2ers (%ho cons!me most of their income)+ and to b!y
capital $oods that allo% an efficient e)pansion of prod!ction at a rate g-.
'his (ind!ced
demand* is capt!red by the multiplier . accelerator mechanism and can be represented
dra%in$ a parallel to /i. 3t intersects %ith the prod!ction f!nction at 0o. 7iven o!tp!t and
labor prod!ctivity %e obtain the level of employment (1o20o3) that may fall belo% f!ll
'he ind!ced demand of intermediate $oods is hidden in macroeconomic models. Act!ally it is acco!nted as
(indirect labor* and (indirect fi)ed capital*.
De Juan: A disaggregated multiplier-accelerator model of growth.
employment. 7iven the capital B o!tp!t ratio (4) or de capital B labor ratio () %e obtain the
stoc2 of capital that %ill be effectively !sed. 3t may also fall belo% the e)istin$ stoc2+
implyin$ !nder!tili&ation of capital. ,!t firms do desire to %or2 at f!ll capacity+ so they
%ill try to recover it by modifyin$ investment decisions.
Figure *
Figure +
,igure 3 $oes deeper into the dynamics of a!tonomo!s demand. 'he en$ine of
$ro%th consists in the introd!ction of ne% $oods and services by the innovative firms.
Us!ally they sprin$ in (cl!sters* and they sp!r the demand for complementary $oods.
Some $oods (s!bstit!tes) may be displaced+ b!t $enerally the balance is positive (creative
destr!ction). 3n the $raphic+ the hori&ontal arro% !nder the headin$ of innovation eects,
encaps!lates s!ch comple) relationships. /iussion eects refer to the potential mar2et
%hich faces any ne% $ood. Capital $oods and d!rable cons!mption $oods !s!ally evolve
follo%in$ a lo$istic c!rve+ as the one depicted in fi$!re A. At the be$innin$ the rate of
$ro%th is very lo%. 3t accelerates as more people 2no% abo!t the prod!ct and they have the
income to p!rchase it. After a point+ the mar2et for the ne% prod!ct sho%s symptoms of
sat!ration and its rate of $ro%th decelerates. /ragging eects refer to ind!ced
cons!mption and investment that are capt!red by the m!ltiplier and accelerator
mechanisms that %e shall comp!te in the ne)t section.
4. Computation o! the multiplier-accelerator.
5a1 nduced con$umption.
3n the 5eneral Theory+ 1eynes ass!med that the b!l2 of private cons!mption
depended on the disposable income of ho!seholds (0d). 'he hypothesis %as verified at that
time+ and has been ratified ever since. 3n the second half of the >D
cent!ry the propensity
to cons!me of ho!seholds in advanced co!ntries has been -!ite hi$h and stable. 1alec2i
advanced a similar statement st!dyin$ in depth the relation bet%een cons!mption
e)pendit!res and income distrib!tion. 'he a$$re$ate propensity to cons!me (c) %o!ld be a
%ei$hted avera$e of %or2ers/ propensity to cons!me o!t of %a$es (cw that is s!pposed to be
close to :) and capitalists/ propensity to cons!me o!t of profits (cr that is s!pposed to be
rather lo%). 3f so+ the a$$re$ate ind!ced cons!mption co!ld be comp!ted by the follo%in$
e-!ation %here $! stands for after-ta) %a$es and 6! for after-ta) profits.
) B M N( ) B M N( N M 0 6 c 0 $ c 0 c *
r w d
+ = =
8!r social acco!ntin$ matri) allo%s !s to present more social $ro!ps+ each one
characteri&ed by a partic!lar propensity to cons!me and a partic!lar cons!mption bas2et.
4e Y!an+ Cadarso S CZrcoles+ :GGI+ presented an ind!ced cons!mption f!nction ?*!@ of the
follo%in$ type:
3n o!r description %e are follo%in$ Sch!mpeter (:G:>). A recent boo2 by ,a!mol (>DD>) proves that
Sch!mpeterian ideas are still !sef!l.
De Juan: A disaggregated multiplier-accelerator model of growth.
[ ] [ ] [ ]
nh nn
Tr 0 T ' &* /* * + = N N N M
'he e)pression sho!ld be read from ri$ht to left.
8!r point of depart!re is the matri) of
val!e added or primary incomes matri) ?0@. ;e add c!rrent transfers ?Tr@ and disco!nt
direct ta)es [T%\ to obtain disposable income. 6rem!ltiplyin$ by [6C\ %e obtain the
income systematically cons!med. 3n the dia$onal of [6C\ %e find the cons!mption
propensities of the different ho!seholds. ?4C@ indicates the distrib!tion of cons!mption
e)pendit!res by $oods.
3t is a rectan$!lar matri) %ith n ro%s (each one for any ind!stry-
prod!ct)+ and h col!mns (each one for each ho!sehold $ro!p). ,y constr!ction+ any
col!mn of ?4C@ adds !p to :.
5'1 nduced in6e$tment.
3nvestment may be also split into a!tonomo!s and ind!ced e)pendit!res. 'he
a!tonomo!s part+ or (moderni&ation investment*+ is related to the la!nchin$ of firms into
ne% $oods and mar2ets. 3n principle+ it does not increase capacity= it simply replaces old
capital $oods by ne% ones that %ill ma2e possible f!t!res increases in prod!ctivity.
(3nd!ced investment*+ (e)pansionary investment* or+ simply+ (acc!m!lation* can be
e)plained by the accelerator mechanism. ,y acc!m!latin$ capital+ firms try to increase
prod!ctive capacity in order to match+ in efficient conditions+ the permanent increases in
demand. 'he accelerator investment f!nction is the only one that yields acceptable
res!lts. 6robably+ after separatin$ the a!tonomo!s part+ the f!nction %o!ld behave even
Let !s start o!r presentation in a macroeconomic settin$ that %e e)plained %ith
more detail in 4e Y!an (:GGG). 'he a$$re$ate investment of firms at the end of period (t*
depends on the e)pected increases in a$$re$ate demand. ;e can %rite:
t - t t t t
0 g 4 / g 4 / / g 4 ' N N N N ) N( N M
= = =
4 is the normal or desired capital B final o!tp!t ratio. ;hen the act!al ratio (4t) e-!als the
desired one+ the de$ree of capacity !tili&ation is at its normal level: u2434tV:. (g7/t* is the
e)pected increase in a$$re$ate demand+ that is s!pposed to end!re for $ood. A feat!re of
the 1eynesian model %e are b!ildin$ !p is that some components of demand have an
a!tonomo!s rate of $ro%th (g-) %hile the others adapt passively to the former. 3f so %e can
!se g- instead of g. ;e can also %rite 0t instead of /t+ since final prod!ction and income
(0) ad!sts to e)pected final demand.
An$!lar brac2ets imply a dia$onal matri). ' is the identity matri). 'he s!bscripts refer to the dimensions of
the matrices. ;e start %ith a matri) of (h* ro%s and (n* col!mns= so many ro%s as ho!sehold $ro!ps (and
related instit!tions)= so many col!mns as ind!stries. ;e end !p %ith a (nNn] matri)+ altho!$h only $oods
devoted to final cons!mption %ill have positive fi$!res in the correspondin$ ro%.
3nformation abo!t propensities to cons!me and e)pendit!re patterns can be obtained from family b!d$et
statistics. 'he problem is that the cons!mption $ro!ps of s!ch statistics do not coincide %ith the cons!mption
$oods contemplated in inp!t o!tp!t tables. A brid$e is necessary to oin both statistics. #conometrics %ill
help to fill certain $aps.
3n the complete model %e sho!ld s!btract val!e added ta)es (8"T) and the imports of cons!mption $oods
(9c) in order to obtain (domestic ind!ced cons!mption* (*:). 'he ne% e-!ation %o!ld loo2 li2e:
*:2 ;'-9c<7;'-8"T<7*!.
De Juan: A disaggregated multiplier-accelerator model of growth.
'he precedin$ e-!ation %or2s %hen the economy is in the e-!ilibri!m path of
$ro%th+ i.e. %hen 4 is initially at the desired level and the e)pected $ro%th of a!tonomo!s
demand coincides %ith Carrod/s %arranted rate of $ro%th. 3n dise-!ilibri!m conditions
the form!la has to be modified. S!ppose that+ for any reason+ a!tonomo!s demand remains
sta$nant at t. 3nvestment at the end of t-: %ill be nil and some e)cess of inventories (Ei,t)
are bo!nd to appear. 3n t+ firms %ill disco!nt s!ch !ndesired inventories from e)pected
demand. 6rod!ction %ill fall and the previo!s stoc2 of capital %ill e)ceed the re-!ired one.
#)cess of capacity (E2+t) %ill sho% !p+ implyin$ 4=4t, u>1. At the end of t+ even if
a!tonomo!s demand res!mes the previo!s rate of $ro%th+ these e)cesses of capacity %ill be
disco!nted from the investment comp!ted in ?K@. 3n dise-!ilibri!m sit!ations+ the
investment f!nction %o!ld loo2 li2e:
?G@ t a
t 4 t i t t t
0 g
E E / / g 4 ' N N )) ( N( N M
+ : + :
'he compact form at the ri$ht-hand side is a ro!$h appro)imation. ;hat matters (as %e
have sho%n in 4e Y!an+ :GGG) is that+ %henever firms behave as indicated+ the e)cesses
(shorta$es) of capacity are bo!nd to disappear. 3n the absence of ne% shoc2s+ the economy
%o!ld soon recover a f!ll capacity path of $ro%th.
'he translation of these ideas to the disa$$re$ated model is not a strai$htfor%ard
iss!e. 'o be$in %ith final demand and final o!tp!t has to be replaced by a dia$onal matri)
of total o!tp!t+ [-\. 'he a$$re$ate capital Bnet o!tp!t ratio %ill become a matri) of direct
capital coefficients: ?4@ V ??@N[#\
. And %hat %o!ld be the rate of $ro%th^ ;e cannot
!se the rate of $ro%th of a!tonomo!s demand+ since it consists of several $oods each one
$ro%in$ at a specific rate. 6!t in a positive %ay. ;e co!ld ta2e a sin$le $ro%th rate for all
ind!stries (g-)+ only %hen all the components of the vector of a!tonomo!s demand are
$ro%in$ at the same rate+ and this rate coincides %ith the %arranted or potential one. 3f so+
the path of $ro%th %o!ld be harmonic+ steady and efficient< 0et this ass!mption %o!ld
p!t !s o!tside the m!ltisectoral capitalist economy %e try to !nderstand. 9or the sha2e of
realism %e sho!ld chan$e the scalar g- for matri) [$\. 3n the dia$onal of this matri) %e
find the e)pected rate of $ro%th of total o!tp!t in each ind!stry+ a rate that firms e)trapolate
from the past. ;henever there is a chan$e in the rate of $ro%th of one or several
components of a!tonomo!s demand+ e)cesses (ins!fficiencies) of inventories and capacity
%ill appear. 9irms %ill behave as indicated in ?G@ in order to $et rid of them. After a time
they %ill learn the ne% rate of $ro%th of the demand for their prod!cts and their investment
decisions %ill be determined by the follo%in$ e)pression:
[ ] [ ]
nn nn
nn nn
# g 4 ' N N M =

5c1 "he multiplier-accelerator.
'he m!ltiplier-accelerator that capt!res ind!ced cons!mption and investment for the
a$$re$ated economy %o!ld be:
9or b!ildin$ the accelerator %e are only interested in ind!ced (domestic* investment. 'he imports of
capital $oods sho!ld be therefore disco!nted. 'he res!lt %o!ld be: ':2?'-?4@7'!.
De Juan: A disaggregated multiplier-accelerator model of growth.
4g c

A similar form!la can be derived for o!r m!ltisector economy. 3np!t-o!tp!t tables
and SAM present %ith a $reat detail the interind!stry transaction matri)+ ?T@n+n. 3t $ives
information abo!t the intermediate inp!ts re-!ired by each ind!stry to s!stain its act!al
level of prod!ction.
;e have comp!ted the matrices of ind!ced cons!mption ?*!@ and
ind!ced investment ?'!@. Addin$ them !p %e obtain the enlar$ed transaction matri) ?T
?:>@ M M
' * T T + + =
4ividin$ by the total o!tp!t of each ind!stry %e obtain the (economic matri)* ?"
%hose cells are e-!al or $reater than the !s!al technical matri) ?"@.
: W W

= # T "
.o% %e comp!te:
?:I@ [ ]

= " ' 9@
9@ is the m!ltiplier-accelerator of total or $ross o!tp!t+ %e %here loo2in$ for. #ach
col!mn informs !s abo!t the direct and indirect effects of a !nitary e)pansion of ind!stry
over the o!tp!t of all the ind!stries that provide reso!rces to . 'he provision may be in
direct or indirect %ay+ and the (reso!rces* are defined in the broadest sense so to incl!de
intermediate $oods+ final cons!mption $oods to attend the cons!mption stemmed from the
ne% incomes+ and fi)ed capital $oods to e)pand capacity at the re-!ired rate.
'otal o!tp!t involves the !s!al problem of do!ble co!ntin$. 5esearchers !s!ally
are more interested in obtainin$ the dra$$in$ effects on net income. ;e can comp!te it by
prem!ltiplyin$ ?9@@ by the dia$onal matri) vL
+ %hich indicates+ for each ind!stry+ the
proportion of val!e added in total o!tp!t:
?:E@ [ ]

= " ' v 90
'o obtain the m!ltiplier-accelerator of employment %e have !st to prem!ltiply
?9@@ by the matri) of labor coefficients ?l@. #ach col!mn of 91 informs abo!t the
-!antities and -!alities of the obs created in the %hole system after the !nitary e)pansion
of ind!stry . A$ain+ it acco!nts for the obs created in the prod!ction of intermediate
$oods+ final cons!mption $oods and fi)ed capital $oods.
?:P@ [ ]

= " ' l 91
Let !s concl!de o!r analysis of the m!ltiplier-accelerator %ith some notes abo!t its
e)istence and stability. 9@ e)ists and is stable provided the addition of the elements of any
col!mn of the economic matri) ("
) is lo%er than :.
'he viability in prod!ction ass!res
;e have ass!med that T matri) incl!ded+ as %ell+ fi)ed capital cons!mption. 3n practice this is not the case
so %e sho!ld comp!te the matri) of capital cons!mption by $oods and ind!stries before addin$ it to
intermediate cons!mption.
;e remind that for the p!rposes of this section+ all the matrices sho!ld contain only domestic p!rchases.
'he dimension of all these matrices is n7n + so %e can omit the s!bscripts and the s-!are brac2ets.
'his is a s!fficient condition.
De Juan: A disaggregated multiplier-accelerator model of growth.
that col!mns of matri) of technical coefficients (") are lo%er than :. After the
introd!ction of final cons!mption coefficients in matri) "
the condition for stability is not
%arranted. ;e have to r!le o!t the possibility that ho!seholds+ via credit+ cons!me
systematically more than they earn. After the introd!ction of investment coefficients %e
obtain "
and the chances to ens!re stability are still lo%er. 'he e)pected rate of $ro%th of
demand cannot be %hatsoever.
'he proof is easier from a macroeconomic standpoint. 'o $et a positive
(economically si$nificant) val!e for the a$$re$ated m!ltiplier-accelerator $iven in ?::@ the
e)pected $ro%th of demand sho!ld be lo%er than Carrod/s %arranted rate.
g =

'he last ratio can be e)pressed as s34 %here s stands for the part of income systematically
saved and 4 for the desired ratio capital B o!tp!t. 3f the propensity to cons!me is red!ced to
&ero+ s becomes :+ and the ma)im!m rate of $ro%th is :B4+ %hich coincides %ith Jon
'hin2s are more comple) in a m!ltisector economy. Credits allo%s %or2ers and
firms of ind!stry to cons!me and invest above the incomes $enerated in its process of
prod!ction. 0et+ they cannot behave eternally in this %ay. Credits have be repaid o!t of
%a$es and profits. 'he disa$$re$ated m!ltiplier-accelerator sho!ld be derived from a SAM
%here the str!ct!res of prod!ction+ distrib!tion and e)pendit!re 2eep certain conditions of
viability. 'he application of this instr!ment is aimed at capt!rin$ the normal e)pansion of
ind!stries interrelated via prod!ction+ cons!mption and investment. 3nd!stries $ro%in$ at
a hi$her rate sho!ld be located in the a!tonomo!s demand vector (the (m!ltiplicand*)+ not
in the m!ltiplier-accelerator matri).
4. Conclu$ion$.
Capitalism is a demand-constrained system. 'his %as o!r first 1eynesian
hypothesis that has been fertili&ed %ith some ideas of Sch!mpeter. 'he motor of capitalist
economies has been located in the innovative firms la!nchin$ into ne% $oods and ne%
mar2ets. 3n their e)pansion+ these firms dra$ alon$ the prod!ction of the ind!stries
interrelated %ith them in the broadest sense and either in a direct or indirect %ay. ;hat
2ind of $ro%th can %e e)pect form these hypothesis^ Certainly it has nothin$ to do %ith
the harmonic+ steady and efficient $ro%th derived from s!pply side models+ either classical
(as the von .e!mann/s model) or neoclassical. 7ro%th %ill be+ precisely+ characteri&ed by
the opposite notes.
(:) -ransformational growt%. 'he innovative firms %ill probably $ro%+ for a %hile+ very
-!ic2ly. 'he ind!stry+ they belon$ to+ %ill accelerate its rate of $ro%th+ !nless the
e)pansion of the ne% $oods res!lts in a displacement of old ones. 'he rest of the
economy is s!pposed to $ro% at the avera$e rate of a!tonomo!s demand+ ta2in$ into
acco!nt both the creative and destr!ctive forces. ,!t as soon as %e allo% for technical
chan$e (associated %ith the introd!ction of ne% capital $oods)+ the sectoral rates of
$ro%th are bo!nd to diver$e. 3nd!stries receivin$ the b!l2 of benefits of technical
innovation %ill $ro% faster+ provided their price elasticity is hi$h eno!$h. 6asinetti
De Juan: A disaggregated multiplier-accelerator model of growth.
(:GK:)+ reminds !s (#n$el/s la%* to concl!de that the system %ill e)pand by the front
of ind!stries %ith hi$her income elasticity. 3n a n!tshell+ the te)t boo2 (harmonic
$ro%th* %ill ma2e %ay to (transformational $ro%th*+ to !se the term coined by .ell
(>) Irregular growt%. 3f the e)pansion of ne% $oods follo%s a lo$istic c!rve (as the one
depicted in fi$!res > and A) $ro%th %ill not be steady b!t irre$!lar. 'he economy %ill
e)perience a lon$ %ave of prosperity after the introd!ction of an epoch ma2in$
innovation or a cl!ster of innovations %ith important diff!sion and dra$$in$ effects.
;hen the mar2et for these prod!cts become sat!rated+ a lon$ %ave of depression may
start !nless other innovations ta2e the relay. #mbedded in s!ch lon$ %aves %e can
e)pect to find medi!m term cycles (!s!ally of a chaotic type)+ ca!sed by ad!stments
via inventories and capacity !tili&ation.
(A) Inneficient growt%. 9irms try contin!o!sly to ad!st capacity at the desired level. ,!t
any chan$e in the e)o$eno!s rate of $ro%th or any fail!re in demand e)pectations is
bo!nd to ca!se an inefficient !se of capacity. 'he inefficiencies %o!ld be even clearer
sho!ld they be meas!red by the rate of !nemployment.
8!r model ill!minates these $eneral and important characteristics of capitalist
economies. 3n addition+ it may !sef!l for more concrete tas2s. 3t helps comp!te the impact
on total o!tp!t+ net income and employment associated to the e)pansion of some ind!stries
and firms+ both %hen they s!pply domestic or forei$n mar2ets. 'he m!ltiplier-accelerator
%e propose has t%o important advanta$es over the !s!al m!ltiplier derived from inp!t-
o!tp!t tables or SAM. (a) 3t is more complete since it incl!des ind!ced investment of the
accelerator type= (b) 3t is easier to !se and interpret since it is presented in a compact form.
De Juan: A disaggregated multiplier-accelerator model of growth.
,AUM8L+ ;. (>DD>): The ree-mar4et innovation machine. "nlysing the growth miracle
o capitalism+ 6rinceton+ 6rinceton University 6ress.
4# YUA.+ 8.= CA4A5S8+ M.A. S C_5C8L#S+ C (:GGI): (M!ltiplicadores inp!t-
o!tp!t 2alec2ianos: !na estimaciZn a partir de la tabla inp!t-o!tp!t espa`ola de :GGD*+
EconomAa 'ndustrial+ n. >GK+ p. :>G-:II.
4# YUA.+ 8. (:GGG): (Lar$as olas de prosperidad y depresiZn en la dinamica capitalista*+
in ,53CALL S 4# YUA. (eds.): EconomAa polAtica del crecimiento, luctuaciones y crisis+
,arcelona+ Ariel+ p. IE-K:.
CA5584+ 5. (:GAG): (An essay in dynamic theory*+ Economic Bournal+ v. IG+ p. :I-AA.
1AL485+ .. (:GEP): (Alternative theories of distrib!tion*+ 6eview o Economic Ctudies+ v.
>A+ n. PD+ p. KA-:DD.
1AL#C13+ M. (:GH:): Celected essays on the dynamics o the capitalist economy+
Cambrid$e+ Cambrid$e University 6ress.
1#0.#S+ Y.M. (:GAP): The general theory o employment, interest and money+ London
185.A3+ Y. (:GHG): (5eso!rce-constrained vers!s demand-constrained systems*+
Econometrica+ v. IH+ n. I+ p. KD:-K:G.
1U5Q+ C.4.(:GKE): (#ffective demand in a (classical* model of val!e and distrib!tion: the
m!ltiplier in a Sraffian frame%or2*+ 9anchester Cchool o Economic and Cocial Ctudies, v.
L333 (>)+ Y!ne+ p. :>:-AH.
LA7#5+ C. (:GGH): ('reatment of fi)ed capital in the Sraffian frame%or2 and in the theory
of dynamic inp!t-o!tp!t models*+ Economic Cystems 6esearch+ v. G+ n. I+ p. AEH-AHA.
L#8.'#39+ ;. (:GHD): ('he dynamic inverse*+ in CA5'#5 A.4 ,5_40 (eds.):
*ontributions to input-output analysis, Amsterdam+ .orth Colland+ c. :+ pp. :H-IP.
M30AQA;A+ 1. S MAS#73+ S. (:GPA): (3nterind!stry analysis and the str!ct!re of
income distrib!tion*+ 9etroeconomica, v. :E+ n. >-A+ p. :P:-GE.
.#LL+ #.Y. (:GGK): The general theory o transormational growth+ Cambrid$e+ Cambrid$e
University 6ress.
6AS3.#''3+ L. (:GK:): Ctructural change and economic growth. " theoretical essay on
the dynamics o the wealth o nations+ Cambrid$e+ Cambrid$e University 6ress.
De Juan: A disaggregated multiplier-accelerator model of growth.
60A''+ 7. S 58U.4+ Y. (:GHG): (Acco!ntin$ and fi)ed price m!ltipliers in a social
acco!ntin$ matri) frame%or2*+ The Economic Bournal+ n. KG+ p. KED-KHA.
SCCUM6#'#5+ Y. (:G:>): Theorie der $irtschatlichen Entwic4lung+ M!nich+ Jerla$
4!n2er S C!mbolt.
S5A99A+ 6. (:GPD): &roduction o commodities by means o commodities. &relude to a
criti#ue o economic theory+ Cambrid$e+ Cambrid$e University 6ress.
J8. .#UMA..+ Y. (:GIE-P): (A model of $eneral e-!ilibri!m*+ The 6eview o
Economic Ctudies+ v. b333+ p. :-G. (8ri$inal 7erman paper of :GAK).
De Juan: A disaggregated multiplier-accelerator model of growth.
-able (: A .A/ suitable for growt% analysis.
6584UC'38. C8.SUM6'38. 3.J#S'M#.'
#:+ #> < #n L= #= C: <Cp = 7= 9 #:...#n= C:...Cp= 7= 9
9. 6584UC'38.
(sales) #:
9. 3.J#S'M#.'
.ymbols: # : activities or ind!stries that prod!ce $oods= %e ma2e them to coincide %ith the instit!tion
(enterprises*= L V labor= C V ho!seholds= 7 V $overnment= 9 V financial instit!tions= ' V interind!strial
transactions or intermediate cons!mption= C V final cons!mption= 3 V investment= 0 V val!e added as primary
incomes= 'r V c!rrent transfers= it incl!des ta)es= 'r-2 V capital transfers= S V savin$s= 99 V financial flo%s.
-able *: A .A/ for t%e 0on Neumann supply1side model.
6rod!ction Cons!mption 3nvestment
9. 6rod!ction
(sales) '/ 3
9. Cons!mption
(%a$es above
9. 3nvestment
(profits) 5VSV3
De Juan: A disaggregated multiplier-accelerator model of growth.
-able +.a : A .A/ for a demand constrained economy.
6rod!ction 3nd!ced
3nd. 3nvestment
9. 6rod!ction
9. 3nd!ced
Cons!mption 0 'r
9. Acc!m!lation
S/ 'r2X99
A!t. 3ncome
to 9. A!t. 4.
-able +.b: A compacted .A/ for a demand constrained economy.
7ro%in$ reprod!ction
:+ > < n
A!tonomo!s 4emand
9. 7ro%in$ 5eprod!ction
A!tonomo!s 3ncome
to 9. A!tonomo!s 4emand
De Juan: A disaggregated multiplier-accelerator model of growth.
Figure (: &rowt% in a supply 1 constrained system.
0: CVc0V%LV;
5oV SoV3o
Lo L: L

1: V 1oX3oV1oXSo

Figure *: &rowt% in a demand 1 constrained system.
A!tonomo!s demand


D : 'ime
A$. 4 and net o!tp!t

c #mployment
Lo L:
Stoc2 of capital

De Juan: A disaggregated multiplier-accelerator model of growth.
Figure +: -%e dynamics of autonomous demand.
A!tonomo!s 4emand
4iff!sion effect

3nnovation effects
4ra$$in$ effect.
3nd!ced demand