The growth imperative revisited: a rejoinder to Gilányi and Johnson

Journal of Post Keynesian Economics 24 Jul 2015

Abstract: In Binswanger (2009) it was shown that in a simple circular flow model of a pure credit economy, positive growth rates are necessary in the long run in order to enable firms to make profits in the aggregate. If the growth rate falls below a certain positive threshold level, firms will make losses. Certain aspects of this model are challenged by the papers of Zsolt Gilányi and Reeves Johnson in this issue of the Journal But nevertheless, both papers confirm the existence of a growth imperative in capitalist economies. This may be taken as evidence that the finding of a growth imperative is quite robust with respect to different model assumptions.

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Der Publikationswettbewerb in der Forschung: Arroganzen, Ignoranzen, Redundanzen

Leibniz-Institut LIFIS 05. April 2011

In der Universität unserer Tage geht es offensichtlich nur noch beiläufig um Erkenntnisgewinn, selbst wenn in Sonntagsreden so getan wird, als stünde dieses Ziel weiterhin im Vordergrund. Tatsächlich sind aber moderne Universitäten einerseits zu Fundraising-Institutionen mutiert, die es darauf anlegen, möglichst viele Forschungsgelder für sich zu akquirieren. Andererseits sind sie Publikationsfabriken geworden, die versuchen, ihren Publikationsoutput zu maximieren.

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Is there a growth imperative in capitalist economies? a circular flow perspective

Journal of Post Keynesian Economics / Summer 2009, Vol. 31, No. 4 707

This paper postulates the existence of a growth imperative in capitalist economies. The argument is based on a simple circular flow model of a pure credit economy, where production takes time. In this economy, positive growth rates are necessary in the long run in order to enable firms to make profits in the aggregate. If the growth rate falls below a certain positive threshold level, firms will make losses. Under these circumstances, they will go out of business, which moves the whole economy into a downward spiral. According to the model presented, capitalist economies can either grow (at a sufficiently high rate) or shrink if the growth rate falls below the positive threshold level. Therefore, a zero growth economy is not feasible in the long run.

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Wachstum, nachhaltige Entwicklung und subjektives Wohlempfinden

Schweizerische Akademische Gesellschaft für Umweltforschung und Ökologie, GAIA 15/1 (2006): 69 –71 | www.oekom.de/gaia

Wirtschaftswachstum bringt mehr Geld. Wer mehr Geld hat, kann sich Wünsche besser erfüllen. Aber machen ein Sportwagen oder eine Luxusyacht glücklich? Forschungsergebnisse sagen: Nein! Macht uns eine nachhaltige Entwicklung glücklicher?

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Why does income growth fail to make us happier? Searching for the treadmills behind the paradox of happiness

The Journal of Socio-Economics 35 (2006) 366–381

Several recent studies have shown that in developed countries, reported levels of happiness do not increase in line with income levels, and people are experiencing more and more time pressure. Together these findings suggest that people do not maximize happiness—they would be better off if they worked less and had more leisure time. Two treadmill effects behind this paradox of happiness have been described in the literature: the positional treadmill, the hedonic treadmill. In this paper I propose two additional treadmill effects: the multi-option treadmill, and the time-saving treadmill, which both seem to make a significant contribution to the stagnation of happiness.

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Bubbles in Stochastic Economies: Can They Cure Overaccumulation of Capital?

Journal of Economics 84 (2005): S. 179-202

It is well known that bubbles possess the potential to increase economic welfare due to a reduction of capital accumulation in deterministic overlapping generations economies that are in a dynamically inefficient state. However, actual economies are stochastic, where the concept of dynamic efficiency has turned out to be a complex issue. This paper contributes in two ways. First, the model presented in this paper establishes that dynamic inefficiency is not a necessary condition for deterministic bubbles in a stochastic economy. Second, a simulation shows that although bubbles are unable to persist in the stochastic steady state, they can still cure overaccumulation of capital for a time long enough to cover agents relevant time horizon.

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Stock returns and real activity in the G-7 countries: did the relationship change during the 1980s?

The Quarterly Review of Economics and Finance 44 (2004) 237–252

Several empirical studies show that a substantial fraction of the changes in growth rates of real activity can be explained by lagged aggregate stock return variations in the U.S. as well as in other G-7 countries from the 1950s to the 1990s. However, the results presented in Binswanger.[International Review of Economics and Finance 9 (2000) 387] indicate that this traditionally strong relation has disappeared in the U.S. in the early 1980s. This paper shows that a similar breakdown occurred in Canada, Japan and in an aggregate economy consisting of the four European G-7 countries. The results provide evidence in favor of the hypothesis that speculative bubbles during the 1980s and 1990s were an international phenomenon. © 2003 Board of Trustees of the University of Illinois. All rights reserved.

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Time-saving innovations and their impact on energy use: some lessons from a household-production-function approach

Int. J. Energy Technology and Policy, Vol. 2, No. 3, 2004, S. 209-218

This paper highlights a specific aspect of time allocation within households: the impact of time-saving technological progress on time use as well as on energy use for non-productive activities. It shows that, under standard assumptions, time-saving technological progress causes a feedback on time use (a rebound effect). If the feedback is strong, households may not ‘save’ any time at all although they constantly invest in time-saving devices. Moreover, innovations of a time-saving nature tend to have a substantial impact on energy consumption. When the opportunity costs of time (the wage rate) are high and energy prices are low, time-saving innovations are also likely to increase energy consumption.

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How important are fundamentals?—Evidence from a structural VAR model for the stock markets in the US, Japan and Europe

Int. Fin. Markets, Inst. and Money 14 (2004) 185–201

This paper presents a bivariate structural VAR model which includes growth rates of industrial production and stock prices. Analyzing data from 1960 to 1999 we find that real activity shocks only explain a small fraction of the variability in real stock prices in the US, Japan and an aggregate European economy since the early 1980s, while they explain a substantial proportion over the 1960s and 1970s in all areas. The results provide additional evidence for the existence of speculative bubbles over the 1980s and 1990s.

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How do stock prices respond to fundamental shocks?

Finance Research Letters 1 (2004) 90–99

We estimate various structural vector autoregression models for the US in order to assess the importance of fundamental shocks in explaining stock price movements. The results show that models using real activity variables place more weight on fundamental shocks than models using dividends or earnings. However, according to all models fundamental shocks became substantially less important during the period 1982–2002 if compared to 1953–1982.

2004 Elsevier Inc. All rights reserved.

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Technological progress and sustainable development: what about the rebound effect?

Ecological Economics 36 (2001) 119–132

Sustainability concepts that rest on the idea of resource- or energy-efficiency improvements due to technological progress tend to overestimate the potential saving effects because they frequently ignore the behavioral responses evoked by technological improvements.

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Stock market booms and real economic activity: Is this time different?

International Review of Economics and Finance, 9 (2000) 387–415

Since World War II, the United States has experienced two large booms on the stock market. During the first boom, which lasted from the late 1940s to the mid-1960s, stock returns were clearly leading real activity. Moreover, the evidence also suggests the existence of predictable return variations in the discount rate through time as a response to changing business conditions. Therefore, the first boom does not stand out as unusual because previous studies, such as Fama (1990) or Chen (1991), confirm these results for the whole period from the 1950s to the 1980s. But during the current boom, which started in the early 1980s, these results do not hold up any more. Stock returns do not seem to lead real activity and predictable return variations as a response to business conditions cannot be detected.

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Stock returns and real activity: is there still a connection?

Applied Financial Economics, 2000, 10, 379-387

Several studies published in the early 1990s found that a large fraction of stock return variations can be explained by future values of measures of real activity in the United States by using data samples from the 1950s to the 1980s. This paper presents evidence that the relation does not hold up any more during the most recent stock market boom since the early 1980s indicating that stock returns ceased to lead real economic activity. Therefore, the current stock market boom seems to be fundamentally different from the ® rst stock market boom after World War II from the late 1940s to the mid-1960s, when the stock market was clearly leading real activity. A possible explanation of our results is the existence of bubbles or fads which make movements of stock prices more independent from subsequent changes in real activity.

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The Finance Process on a Macroeconomic Level from a Flow Perspective: A New Interpretation of Hoarding

International Review of Financial Analysis, Vol. 6, No. 2,1997, pp. 107-131

The simple circular flow model of money presented in this paper aims to show that the relation between money creation, saving, investment and growth becomes more complex, the more the financial sector is involved in economic activities. If an increasing part of financial funds circulates outside the circular flow of money, which describes the money flows connected to the real activities within the economy, the relation between money creation and real investment but also between money creation and the price level is obscured. These money flows may be interpreted as a new kind of “financial hoarding” which plays a major role in modern credit money economies.

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Monetäre Dynamik und Nachhaltigkeit

Der Begriff der "Nachhaltigkeit" bzw. "Sustainable Development" ist seit der Veröffentlichung des Brundtland-Berichtes im Jahre 1987 zu der wahrscheinlich am häufigsten gebrauchten Vokabel in der Oekonomie geworden, wenn es darum geht, ökologische Ziele für die Zukunft zu formulieren.

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Artikel in referierten Fachzeitschriften (vor 2006)

Why Does Income Growth Fail to Make Us Happier? - Searching for the Treadmills Behind The Paradox of Happiness, Journal of Socio-Economics 36 (2006): S. 119-132.


Wachstum, nachhaltige Entwicklung und subjektives Wohlempfinden , Gaia 15 (2006): S. 69-71.


Bubbles in Stochastic Economies: Can They Cure Overaccumulation of Capital ?, Journal of Economics 84 (2005): S. 179-202.


Weiterlesen: Artikel in referierten Fachzeitschriften (vor 2006)