A Centre-Periphery Framework on Kaldorian Lines

21 Pages Posted: 30 Mar 2009

See all articles by Prabirjit Sarkar

Prabirjit Sarkar

University of Cambridge - Centre for Business Research (CBR)

Date Written: March 29, 2009

Abstract

This paper develops the seminal ideas of Nicholas Kaldor into a Centre-Periphery framework of the world economy where the Centre faces the problem of surplus capacity and effective demand and the Periphery faces a capacity constraint. In such a framework, Harrod-type 'foreign trade multiplier' works in a short run partial equilibrium analysis: a rise in the peripheral output increases demand for output of the Centre. There is some ambiguity in the short-run effect of the peripheral terms of trade on the output of the Centre. In the long-run equilibrium growth of the whole framework the' foreign trade multiplier' does not work. A rise in the factor productivity and/or the growth rate in the Periphery leads to a fall in their terms of trade while the Centre remains unaffected. A rise in the productivity in the Centre affects their factor income - not their terms of trade.

Keywords: Kaldor, Kalecki, Centre-Periphery, North-South, Terms of Trade, Prebisch-Singer hypothesis, structuralist macroeconomics

JEL Classification: E12, F41, F43, O11, O41

Suggested Citation

Sarkar, Prabirjit, A Centre-Periphery Framework on Kaldorian Lines (March 29, 2009). Available at SSRN: https://ssrn.com/abstract=1369862 or http://dx.doi.org/10.2139/ssrn.1369862

Prabirjit Sarkar (Contact Author)

University of Cambridge - Centre for Business Research (CBR) ( email )

Cambridge
United Kingdom