Research Papers in Economics, Department of Economics, Stockholm University
Combining Keynes and Schumpeter. Ingvar Svennilson's Contribution to the Swedish Growth School and Modern Economics
Abstract: In a study of European growth in the interwar period, the
Swedish economist Ingvar Svennilson integrated a Keynesian theory of
cumulative growth with a Schumpeterian analysis of economic transformation.
Svennilson emphasised that innovations and the use of new technologies had
been stimulated by high demand and production growth. Svennilson’s strong
commitment to "Vendoorn's Law" which actually was "Svennilson's Law", made
it difficult to incorporate him in a Schumpeterian tradition. A synthesis
between Keynes and Schumpeter with Svennilson as a mediator was also
prevented by the decisive role of entrepreneurship and the critique of
Keynesian models in works by Schumpeter and the Swedish growth school.
However, a synthesis has been facilitated by neo-Schumpeterian theories of
demand-led innovations and cumulative economic processes. Svennilson’s
study has been superseded by later contributions to economics except for a
theory of a negative, "Keynesian", relationship between unemployment and
growth and an exceptional "un-Verdoornian" theory that high aggregate
demand may lead to crowding-out of new firms from capital markets. Besides,
Svennilson's integration of short run and long run macro analysis and of
theoretical and empirical work is still a fruitful research strategy in
Keywords: Innovations; Cumulative Growth; Productivity Growth; Verdoorn’s Law; Swedish Growth School; (follow links to similar papers)
JEL-Codes: B25; E11; E32; N14; O11; O14; O31; (follow links to similar papers)
35 pages, July 22, 2003
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