Kemp-Benedict, E. orcid.org/0000-0001-5794-7172 and Ghosh, E. (2018) Downshifting in the Fast Lane: A Post-Keynesian Model of a Consumer-Led Transition. Economies, 6 (1). 3. ISSN 2227-7099
Abstract
If the world’s countries seriously tackle the climate targets agreed upon in Paris, their citizens are likely to experience substantial changes in production, consumption, and employment. We present a long-run post-Keynesian model for studying the potential implications of a major transition on macroeconomic stability and employment. It is a demand-led model in which firms have considerable but not absolute freedom to administer prices, while household consumption exhibits inertia. Firms continually seek input-saving technological improvements that, in aggregate, tie technological progress to firms’ cost structures. Together with firm pricing strategies and wage setting, the productivities of different inputs determine the functional income distribution. Saving and investment, and production and purchase of consumption goods, are undertaken by different economic actors, driven by income and capacity utilization, with the possibility that productive capacity exceeds, or falls short of, effective demand. The model produces business cycles and long waves driven by technological change. We present results for a “downshifting” scenario in which households voluntarily withdraw labor, and discuss the implications of downshifting for stability, growth, and employment. We contrast the downshifting scenario with ones in which households reduce consumption without withdrawing from the labor pool.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2018 by the authors. This is an open access article under the terms of the Creative Commons Attribution License (CC-BY 4.0), which permits unrestricted use, distribution and reproduction in any medium, provided the original work is properly cited. |
Keywords: | demand-led growth; downshifting; Kaleckian-Harrodian; post-Keynesian; ecological economics |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Environment (Leeds) > School of Earth and Environment (Leeds) > Sustainability Research Institute (SRI) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 05 Dec 2024 11:34 |
Last Modified: | 05 Dec 2024 11:34 |
Status: | Published |
Publisher: | MDPI |
Identification Number: | 10.3390/economies6010003 |
Related URLs: | |
Sustainable Development Goals: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:220500 |