Olivier Bruno

Long‐run Positions and Short‐run Dynamics in a Classical Growth Model

The aim of this paper is to study the qualitative impact of short-run disequilibria on long-run positions. In this perspective, we refer to a classical framework. We underline that one sector classical growth models only deal with perfectly adjusted situations (steady-state equilibria). Such models assume that short-run dynamics are neutral in the long run which means that the steady-state is defined independently of the transient dynamics. In order to show that this situation is not always realised, we propose a modified version of H.D. Kurzs growth model (1990a) that integrates short-run disequilibria. We obtain a dynamics that exhibits a multiplicity of equilibria. Therefore, short-run events can no longer be neglected, since they contribute to the emergence of the long-run equilibrium.

The instability principle revisited: an essay in Harrodian dynamics

Abstract Harrods contribution to economic dynamics is very often reduced to the dynamic equation whose character is unstable. Growth theory and cycle theory based on Harrods contributions aimed at reducing this instability. Following Harrod, who was strongly opposed to the ‘knife-edge’ interpretation, we define the warranted rate of growth as a ‘moving equilibrium’ and focus on its interaction with the effective rate of growth. Our simple Harrodian model generates various dynamics from stable path, to growth cycle and corridor of stability.