Last modified: 2017-06-06
Abstract
Within the Classical-Keynesian approach to the theory of output and growth, this paper intends to address the debate on capacity adjustment by emphasizing on the role of fluctuations. In this regards, it builds on some insights already contained in Trezzini and Palumbo (2016) and Trezzini (2017), in addition to other relevant literature in the approach (especially Ciccone, 1986).
The paper particularly focuses on the investment function, and tries to propose some possible specifications of it that are compatible with what the authors regard as the main insights of the approach – and with the fluctuating character of any growth path.
The main analytical point regards the possibility (and even the necessity) to regard aggregate investment as made both by an induced component and an autonomous one.