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A Note on Credit Allocation, Income Distribution and the Circuit of Capital

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  • Paulo L. Santos

Abstract

This note considers the relationship between credit allocation and the class distribution of income in the Circuit of Capital. Production and consumption credit inject means of purchase into different phases of capitalist reproduction. Comparative-dynamic analysis of steady-state evolutions shows that in the dynamic terms of Circuit of Capital production and consumption credit respectively increase wage and profit shares of aggregate income. These findings hold more broadly for any setting where sectoral revenue elasticities of outlays are below unity. They also have direct policy relevance for advanced and middle-income economies where household borrowing has been encouraged in attempts to support demand and growth.

Suggested Citation

  • Paulo L. Santos, 2014. "A Note on Credit Allocation, Income Distribution and the Circuit of Capital," Metroeconomica, Wiley Blackwell, vol. 65(2), pages 212-236, May.
    • Handle: RePEc:bla:metroe:v:65:y:2014:i:2:p:212-236
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    References listed on IDEAS

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    1. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 8(1), pages 25-40, March.
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    6. Graziani,Augusto, 2003. "The Monetary Theory of Production," Cambridge Books, Cambridge University Press, number 9780521812115.
    7. Paulo L. dos Santos, 2011. "Production And Consumption Credit In A Continuous‐Time Model Of The Circuit Of Capital," Metroeconomica, Wiley Blackwell, vol. 62(4), pages 729-758, November.
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    Cited by:

    1. Xiao Jiang, 2015. "Endogenous Cycles and Chaos in a Capitalist Economy: A Circuit of Capital Model," Metroeconomica, Wiley Blackwell, vol. 66(1), pages 123-157, February.
    2. Ivan Mendieta-Muñoz, 2017. "Explaining the Historic Rise in Financial Profits in the U.S. Economy JEL Classification: E11, E44, G20," Working Paper Series, Department of Economics, University of Utah 2017_06, University of Utah, Department of Economics.
    3. Costas Lapavitsas & Ivan Mendieta-MuÃ’oz, 2017. "Explaining the Historic Rise in Financial Profits in the US Economy," Working Papers 205, Department of Economics, SOAS University of London, UK.
    4. Nikolaos Chatzarakis, 2023. "Stagnation and cycles in Marx’s Circuit of Capital," Working Papers 2310, New School for Social Research, Department of Economics.

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