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The supermultiplier model is gaining momentum. To become a cornerstone of modern macroeconomics, it should explain the dynamics of advanced market economies in a coherent, complete, and simple way. In particular, it is supposed to clarify the possibilities and limits of credit-driven economies, like the one observed in most advanced countries after 1995. This paper contributes to these goals by integrating the Sraffian supermultiplier with the post-Keynesian hypothesis of credit money endogeneity. This hypothesis is somehow modified when autonomous banks are able to accelerate credit above output growth, as happened after 2002. The gap between credit and output growth implies that a part of the loans is financing non-output transactions (land, old houses, shares), usually with a speculative bias. The consequences of a persistent gap are demand depression and asset inflation, as we observed after 2008. [ABSTRACT FROM AUTHOR]

The global financial crisis and ensuing weak growth have increased interest in macroeconomic issues within comparative political economy (CPE). CPE, particularly the dominant Varieties of Capitalism approach, has based its analyses on mainstream economics, which limits analysis of the relation between distribution and growth and neglects the role finance plays in modern economies. It overstates the stability of the capitalist growth process and understates the potential effectiveness of government interventions. Baccaro and Pontusson have suggested a post-Keynesian (PK) theory of distribution and growth as an alternative. This article generalizes their point. PK theory highlights the instability of the growth process and lends itself to an analysis of income distribution and power relations. The article identifies the analysis of financialization and financial cycles, the understanding of neoliberal growth models, and the political economy of central banks as areas where PK economics provides specific insights for CPE. It also highlights that these arguments have important implications for government policy in an era of secular stagnation with ongoing social, distributional, and economic crises. [ABSTRACT FROM AUTHOR]