On the Dynamics of Growth and Debt.

• Author: Hosseinzadeh, Esmail

This is a study of the interrelationship between growth, public debt and the distribution of income/wealth. More specifically, it is a study of the effects of government deficit spending on growth, distribution and indebtedness. The book also studies the stabilizing conditions of such government fiscal policies. In examining these conditions, the author looks into various "fiscal policy regimes" in terms of specific targets. These include the Blinder-Solow regime, the Tobin-Buiter regime, the Domar regime, the Barro regime, and the Christ regime. Which regime performs best at any particular time depends on the state of the economy.

While the study examines the growth, distribution and stability impacts of government spending under each of these regimes, it rejects the respective analytical models (i.e., the public debt models employed by Blinder-Solow and others) on the grounds that these models are based on the IS/LM framework, which is a short-term framework, and therefore "does not offer a very suitable framework for this analysis".

After thus rejecting the conventional short-term models of equilibrium as unsuitable for his analysis, the author then chooses a long-term disequilibrium model of growth inspired largely by the post-Keynesian theories of growth--those of Pasinetti, Kelecki, Kaldor, Malinvud, Kuipers, and others. But while his major focus is the long-run, the author also analyses short-and medium-term growth models. In fact, he sets up disequilibrium growth models for all three time spans: short, medium-and long-term. Each of the three time periods (and the corresponding models) are characterized by specific properties. While the short period is characterized by income-expenditure disequilibrium, the medium period is characterized by demand-capacity disequilibrium (the income-expenditure equilibrium is taken for granted in the medium period). In the long-term, the analysis concentrates on technical change, on labor market disequilibrium and wages, and on the accumulation of debt and wealth. The central question here (i.e., in the long-term) is "whether the system tends to a 'golden age' with a constant rate of unemployment and a constant distribution of income and wealth," as the author puts it.

The book can thus be characterized as a synthesis of various main stream growth theories and models. As such, its theoretical contribution to the body of the existing macroeconomics is minimal. But while the book's theoretical...