Next Article in Journal
Implementation of Enterprise Risk Management (ERM) Framework in Enhancing Business Performances in Oil and Gas Sector
Next Article in Special Issue
Low-Carbon Competitiveness in Asia
Previous Article in Journal
Human Capital, Social Capabilities and Economic Growth
Previous Article in Special Issue
Sets of Sustainable Development Indicators in Vietnam: Status and Solutions
Article Menu

Export Article

Open AccessArticle
Economies 2018, 6(1), 3; https://doi.org/10.3390/economies6010003

Downshifting in the Fast Lane: A Post-Keynesian Model of a Consumer-Led Transition

Stockholm Environment Institute, US Center, Somerville, MA 02144, USA
*
Author to whom correspondence should be addressed.
Received: 6 December 2017 / Revised: 1 January 2018 / Accepted: 4 January 2018 / Published: 10 January 2018
View Full-Text   |   Download PDF [2103 KB, uploaded 10 January 2018]   |  

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. View Full-Text
Keywords: demand-led growth; downshifting; Kaleckian-Harrodian; post-Keynesian; ecological economics demand-led growth; downshifting; Kaleckian-Harrodian; post-Keynesian; ecological economics
Figures

Figure 1

This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

Share & Cite This Article

MDPI and ACS Style

Kemp-Benedict, E.; Ghosh, E. Downshifting in the Fast Lane: A Post-Keynesian Model of a Consumer-Led Transition. Economies 2018, 6, 3.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
Economies EISSN 2227-7099 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top