Growth Models, Varieties of Capitalism, and Macroeconomics

Lucio Baccaro and Jonas Pontusson make a significant contribution to comparative political economy with their approach to analyzing growth in advanced economies, which focuses on the demand side of the economy and distributive conflict. In contrast to Baccaro and Pontusson, however, we view their approach as reinforcing recent developments in varieties of capitalism rather than undermining them. We also believe that the type of modern macroeconomics used by (for instance) Carlin and Soskice is better placed than their post-Keynesian framework to analyze growth models, and that their approach is not inconsistent with it. Modern macroeconomic models incorporate, as they do not, a role for the state-including monetary and fiscal policy-and provide a coherent framework within which to analyze both the supply and demand sides of the economy; they also enable us to understand the interactions between economies and hence the role of growth models in global imbalances.