An Empirical Assessment of the Validity of the Sraffian Supermultiplier Theory in the Korean Economy

This study empirically examines whether the Sraffian supermultiplier theory can be applied to the Korean economy. The cointegration test results show no clear long-run relationship between autonomous expenditures and GDP. However, among the components of autonomous expenditures, both exports and retail financial consumption exhibit cointegration with GDP. When the validity of the supermultiplier theory was tested using a vector error correction model (VECM), increases in exports and retail financial consumption did not lead to significant increases in output, contrary to the theoretical prediction. The core adjustment mechanism of the Sraffian supermultiplier theory involves the responsiveness of the investment-to-output ratio to changes in autonomous demand. The Granger causality test revealed no causal relationship between these two variables. In conclusion, the empirical evidence supporting the validity of the Sraffian supermultiplier theory in the Korean economy is weak.