Autonomous and induced demand in the United States: a long-run perspective

Perez-Montiel J. A. A., Sanso A., ÖZÇELEBİ O., Pariboni R.

JOURNAL OF EVOLUTIONARY ECONOMICS, vol.33, no.4, pp.1237-1257, 2023 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 33 Issue: 4
  • Publication Date: 2023
  • Doi Number: 10.1007/s00191-023-00833-7
  • Journal Name: JOURNAL OF EVOLUTIONARY ECONOMICS
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, IBZ Online, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, Psycinfo
  • Page Numbers: pp.1237-1257
  • Keywords: Accounting identity, Autonomous demand, Autonomous demand-led growth, Induced demand, Supermultiplier
  • Istanbul University Affiliated: Yes

Abstract

This paper presents a long-run study of the relationship between autonomous and induced demand for the United States. Our exercise can be considered a contribution to the burgeoning literature revolving around autonomous demand-led growth models, which have displayed the potential to establish bridges not only within the post-Keynesian community, but also between post-Keynesian economics and other evolutionary and pluralistic approaches to economic growth. In particular, we study the long-run dynamic relationship between autonomous demand - which comprises R & D expenditures, government spending, exports and residential investment - and induced demand. Through a cointegration model with quantile-varying coefficients, we account for the possibility of changes in the relationship between the two variables and demonstrate that the long-run equilibrium relationship between autonomous and induced demand is robust to exogenous shocks and changes in the parameters.