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.
Economies 2018, 6(1), 3; https://doi.org/10.3390/economies6010003
Received: 6 December 2017
/
Revised: 1 January 2018
/
Accepted: 4 January 2018
/
Published: 10 January 2018
(This article belongs to the Special Issue Selected Papers from the International Conference on Sustainable Development 2017, September 18-20, 2017 New York, USA)
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
▼
Show 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
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. https://doi.org/10.3390/economies6010003
AMA Style
Kemp-Benedict E, Ghosh E. Downshifting in the Fast Lane: A Post-Keynesian Model of a Consumer-Led Transition. Economies. 2018; 6(1):3. https://doi.org/10.3390/economies6010003
Chicago/Turabian StyleKemp-Benedict, Eric, and Emily Ghosh. 2018. "Downshifting in the Fast Lane: A Post-Keynesian Model of a Consumer-Led Transition" Economies 6, no. 1: 3. https://doi.org/10.3390/economies6010003
Find Other Styles
Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.
