A Supermultiplier Model with Two Non-Capacity-Generating Semi-Autonomous Demand Components

According to supermultiplier models, economic dynamics are driven by the dynamics of non-capacity-generating autonomous demand components. Since the existing literature suggests several candidates for these components (government expenditures, credit-financed consumption, private residential investments, etc.), it is necessary to analyze how two or more autonomous components can coexist, which is the purpose of the theoretical model and simulations presented herein. In such a context, the term ‘semi-autonomous’ proposed by Fiebiger (2018) is fully relevant, and we suggest distinguishing between active and passive semi-autonomous components (the latter should not be confused with induced components, even in the steady state). Our discussion also provides answers to some criticisms of supermultiplier models (that no component can be autonomous, exogenous or constant in the long run) and supports a flexible use of these models in which the semi-autonomous components can be active in some periods and passive in others