The debate about Sraffian Supermultiplier Model and the future of heterodox growth models

Vol. 40 No. 3 (2020)

Jul-Sep / 2020
Published June 22, 2020
PDF-English
PDF-English

How to Cite

Oreiro, Jose Luís da Costa, Guilherme Jonas Costa da Silva, and Júlio Fernando Costa Santos. 2020. “The Debate about Sraffian Supermultiplier Model and the Future of Heterodox Growth Models”. Brazilian Journal of Political Economy 40 (3), 510-31. https://doi.org/10.1590/0101-31572020-3049.

The debate about Sraffian Supermultiplier Model and the future of heterodox growth models

Jose Luís da Costa Oreiro
Associate Professor of Economics at the Universidade de Brasília – UnB, Brasília/DF, Brasil, and Level IB Researcher at CNPq.
Guilherme Jonas Costa da Silva
Associate Professor and Tutor of the Tutorial Education Program at the Universidade Federal de Uberlândia – UFU, Uberlândia/MG, Brasil
Júlio Fernando Costa Santos
Adjunct Professor of Economics at the Universidade Federal de Uberlândia – UFU, Uberlância/MG, Brasil.
Brazilian Journal of Political Economy, Vol. 40 No. 3 (2020), Jul-Sep / 2020, Pages 510-531

Abstract

This paper aims to present the recent debate about Sraffian Supermultiplier Model (SSM), that gained notoriety in the academic environment after the controversy between Peter Skott (2016) and Marc Lavoie (2016, 2017) on the specification of the investment function of the Neo-Kaleckian models of income growth and distribution. Lavoie used the SSM model as an attempt to rescue the Neo-Kaleckians models of the devastating criticism made by Peter Skott (2010) regarding the specification of the investment function. In this context, we will not only argue that this rescue operation was not successful, but we will also question the capacity of SSM models to serve as an “alternative closure” for heterodox models of income growth and distribution, due to three fundamental shortcomings of the SSM approach, which are: (i) the hypothesis that the normal degree of utilization of the productive capacity is an exogenous variable, (ii) that investment in capacity expansion is totally endogenous; and (iii) the applicability of this approach out of a closed economy framework. We will also argue that the Kaldorian models of growth, which are one of the theoretical foundations of the so-called Developmentalist Macroeconomics, and stock-flow consistent models (SFC) seem to be much more promising alternatives for the development of heterodox theories of growth and income distribution. 

JEL Classification: E12; E37; P10.


Keywords: Sraffian Supermultiplier, heterodox growth models, stock-flow consistent models, developmentalist macroeconomics