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Abstract
This work builds upon “Keynes, Kalecki and Metzler in a Dynamic Distribution Model”. In that paper the dynamics of an economy from the ultra-short to the short period inside a Post-Keynesian perspective were studied questioning the general shared assumption of equilibrium between aggregate demand and aggregate supply in the short and long run Kaleckian models. This paper responds to some unresolved issues of the model proposed there considering a proper analysis of the Kaleckian investment function and a more realistic scenario with the presence of the government sector. Moreover, even if that model tried to deal with firms’ expectations in producing goods, some values boundaries were exogenously established. Here, those boundaries are questioned again. In fact, the novelty of this work is that an active role of the government can actually influence both the values of the expectations and their respective boundaries. It is argued that is particularly the case when the government is engaged in policies which aim is to support and secure a high level of economic activity and to smooth and steer the cycles phases toward a sustainable development path. Particularly we focus on the role of different fiscal policies aimed at obtaining such goals.
Notes
1 It has been noted by one of the reviewer of this work that there is no need to test the equilibrium budget scenario since that is a “Neoclassical obsession”. Even if we completely agree with that point of view, we think that it might still be useful to check the different effects of those policies and if the equilibrium budget policy can better answer to the external shocks under investigation.
2 In the simulated scenario with demand for investments function of wage levels and cu, we rescaled the and
parameters, now assuming respectively the values of 0,00005 and 0,0005.