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Crazy as Adam Smith: the Media Discovers the Kaldor-Verdoorn Effect

Summary:
So Kevin Drum at Mother Jones discovers the Kaldor-Verdoorn effect, and the fact that growing demand might be the main cause of rising productivity, and idea as old as Adam Smith in his vent for surplus model (chapter 3 of the Wealth of Nations says that the division of labor, that is, productivity, which is the basis for development, is limited by the extent of the market, that is, by demand). I posted extensively on that here (all post by date here), and produced, as far as I know, the only methodology to separate the Verdoorn effect (long term trend effect) from the Okun effect (cyclical effect) with one of my graduate students long ago (see here). And yes this is in part why a Bernie type policy would actually lead to significant changes in employment and productivity.

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So Kevin Drum at Mother Jones discovers the Kaldor-Verdoorn effect, and the fact that growing demand might be the main cause of rising productivity, and idea as old as Adam Smith in his vent for surplus model (chapter 3 of the Wealth of Nations says that the division of labor, that is, productivity, which is the basis for development, is limited by the extent of the market, that is, by demand). I posted extensively on that here (all post by date here), and produced, as far as I know, the only methodology to separate the Verdoorn effect (long term trend effect) from the Okun effect (cyclical effect) with one of my graduate students long ago (see here). And yes this is in part why a Bernie type policy would actually lead to significant changes in employment and productivity.
Matias Vernengo
Econ Prof at @BucknellU Co-editor of ROKE & Co-Editor in Chief of the New Palgrave Dictionary of Economics

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