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A Minskyan critique of the financial constraint approach to financialization

Author

Listed:
  • Ilhan Dögüs

    (Research Associate, Department of Socioeconomics, University of Hamburg, Germany)

Abstract

In this paper, the post-Kaleckian approach to financialization, which argues that investment of non-financial corporations (NFCs) in real capital assets has been constrained by rising dividend and interest payments, will be criticized based on a Minskyan understanding of investment. It will be suggested that reinvestment of profits in capital assets has decreased because of a decline in quasi-rent expectations induced by depressed demand. The argument will be tested via Granger causality using available US data for the period between 1960 and 2014.

Suggested Citation

  • Ilhan Dögüs, 2018. "A Minskyan critique of the financial constraint approach to financialization," Review of Keynesian Economics, Edward Elgar Publishing, vol. 6(2), pages 202-220, April.
    • Handle: RePEc:elg:rokejn:v:6:y:2018:i:2:p202-220
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    Cited by:

    1. Shromona Ganguly, 2021. "Financialization of the Real Economy: New Empirical Evidence from the Non-financial Firms in India Using Conditional Logistic Model," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(3), pages 493-523, September.

    More about this item

    Keywords

    financialization; financial constraint; Minsky; capital assets; financial assets;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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