Environment, Effective Demand, and Cyclical Growth in Surplus Labor Economies





Environmental quality, Effective demand, Cyclical growth, Dual economies


The study presents a simple extension of a Harrodian model, that explores, the relationship between the environment and economic growth in a hypothetical dual low-income economy with relatively low levels of environmental quality. It is supposed that the rise in effective demand increases the flow of negative externalities on the environment, which, in turn, would affect output expansion negatively in the capitalist sector through the occurrence of environmental adjustment costs. From such conflictual dynamics, the model shows that perpetual vicious circles may characterize the pattern of fluctuations in economic activity in this economy.

JEL codes: O11, O44, Q50

Author Biography

Guilherme de Oliveira, Federal University of Santa Catarina

Departament of Economics and International Relations


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How to Cite

de Oliveira, G. (2018). Environment, Effective Demand, and Cyclical Growth in Surplus Labor Economies. PSL Quarterly Review, 71(285), 183–201. https://doi.org/10.13133/2037-3643_71.285_5