We propose a new model in which relationship-specific supply and demand shocks are non-parametrically identified in bipartite data under mild assumptions. For example, separate heterogeneous supply shocks are identified for each firm to which a bank lends. We show that a simple estimator is...

This study applies the Quadratic Almost Ideal Demand System (QUAIDS) to the Asian Development Bank's Multi-Region Input-Output (MRIO) dataset to estimate global demand and supply elasticities across intermediate vs. final, and domestic vs. foreign sectors. Using pooled data from 2021-2023,...

We investigate how firms adjust to demand shocks when wages and employment determination are regulated. Using firm-level data for the Italian metal engineering industry from 2009 to 2021, we estimate the elasticity of the wage bill to changes in firm's real sales. We disentangle the effect on...

Questions about market power have become salient in macroeconomics. We consider the role of institutional structures in addressing these within a dynamic general equilibrium framework. Standard models account for monopoly profits as a lump-sum transfer to the representative agent. We label this...

There is limited theoretical understanding of cost pass-through within markets where prices are dispersed. Under a general demand function, we analyse the effects of cost changes in a seminal model of price dispersion, where some consumers are captive to particular sellers while others are not...

Do recessions harm investment in technology and thus future aggregate supply? We provide novel evidence on this question using unique, granular data on innovation investment in R&D and diffusion from a representative survey of German firms. Our data allows to identify the crisis-induced...

In this paper, Structural Vector Autoregressive (SVAR) models of quarterly data between 2007 and 2021 are estimated to assess short-term regimes of aggregate demand and distribution in Germany. The obtained Impulse Response Functions (IRFs) of the conventional neo-Goodwinian baseline case, with...

Purpose - This paper aims to empirically investigate the sources of real exchange rate fluctuations in Egypt using structural vector autoregression (SVAR). The data covers the period between 1980 and 2016, where exchange regime has been changed more than once. Design/methodology/approach - This...

This paper develops a stock-flow consistent Post-Keynesian model in the Kalecki-Steindl tradition with endogenous wealth accumulation and distribution, which captures the key aspects of the Cambridge debate on (anti-)dual and Pasinetti equilibria. We find that a stable interior solution - that...

This paper examines the changes in the dynamic interactions between aggregate demand and income distribution in the USA. We focus on two periods that capture the relevant characteristics before and after contemporary neoliberal capitalism. We study the interactions between aggregate demand and...

The main objective of this article was to describe two asymmetric perspectives of the aggregate imbalance approach. Starting from the contrast of the Rational Expectations and Keynesian approaches, we analyze the characterization that the general reserve makes of the causes of inflation and the...

This article integrates monetary policy into a very simple dynamic supermultiplier model with an accommodating supply side. Results show that monetary policy guided by a conventional Taylor rule may stabilize an economy around the steady-state path of demand-led growth following temporary demand...

We contribute to the recent debate in post-Keynesian economics (PKE), comparative political economy (CPE) and international political economy (IPE) on growth regimes. The paper presents an analysis of changes in demand and growth regimes in the BRICs countries, Brazil, Russia, India, and China,...

We use a quantitative heterogeneous agent model with nominal rigidities and unemployment risk to analyze the effectiveness of several fiscal policies in stabilizing a demand-driven recession. The model delivers empirically realistic distributions of marginal propensities to consume (mpc) and...

The principle of effective demand, and the claim of its validity for a monetary production economy in the short and in the long run, is the core of heterodox macroeconomics, as currently found in all the different strands of post-Keynesian economics (Fundamentalists, Kaleckians, Sraffians,...

This paper first presents a dynamic model that features both real and monetary aspects of international trade and is capable of dealing with both full employment and secular unemployment. The model is then utilized to examine the effect of a tariff on the terms of trade, the trade pattern, real...

Mainstream Macroeconomics has withdrawn completely from its remote origins in Keynes and Kalecki, replacing the principle of effective demand (P.E.D.) with supply economics, investment with savings, and dynamics with equilibrium as a norm This article discusses, in the event of Kalecki’s...

Large swings in the expenditure shares of goods and services at the start of the pandemic have contributed to the inflation surge, posing new challenges for monetary policy. Using a multi-sector model featuring upward labor adjustment frictions, we analyze the transmission of monetary policy...

This paper builds on Baqaee and Farhi (2022) and di Giovanni et al. (2022) to quantify the contribution of fiscal policy to U.S. inflation over the December 2019-June 2022 period. Model calibrations show that aggregate demand shocks explain roughly two-thirds of total model-based inflation, and...

In a continuous-time setting, we study the design of a dynamic contract between a government and a private entity, wherein the latter commits to pay the government in return for the exclusive right to sell a service by operating a public facility. Private revenues are modelled as depending on...

This paper builds on Baqaee and Farhi (2022) and di Giovanni et al. (2022) to quantify the contribution of fiscal policy to U.S. inflation over the December 2019-June 2022 period. Model calibrations show that aggregate demand shocks explain roughly two-thirds of total model-based inflation, and...

The increasingly frequent financial crises have developed the thought to rethink the export-led growth strategy (ELG) to shift to domestic-demand-led growth (DDLG). We employed growth accounting approach to determine DDLG and the autoregressive distributed lag (ARDL) bound test to cointegration...

When faced with economic stagnation, innovation, product innovation in particular, is often cited as an effective stimulus because it is thought to encourage household consumption and lead to higher demand. Using a secular stagnation model with wealth preference, we examine the effects of...

This paper estimates the long-run effects on a county’s prime-age employment rate of labor demand shocks to both the county and its overlying commuting zone (CZ). These effects are allowed to vary with local “distress” (baseline employment rate of the county or CZ), and with the size of...