Explaining persistent cycles in a short-run context: firms' propensity to invest and omnipotent shareholders
AbstractIn this paper, a standard short-run Kaleckian macromodel is developed. The stability of equilibrium is studied and some comparative static exercises are made. The paper then takes into account different specifications for an endogenous propensity to invest and systematically analyze the short-run dynamics of the model. It is shown that when firms' managers adopt abnormal behaviors due to pressures from shareholders regarding the propensity to invest, the system exhibits persistent cycles and chaotic trajectories. The analysis emphasizes that, even in the short run, shareholders may generate instability, which represents a serious threat that should not be underestimated for a capitalist economy.
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Bibliographic InfoArticle provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.
Volume (Year): 32 (2010)
Issue (Month): 3 (April)
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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348
fluctuations; Kaleckian model; propensity to invest;
Other versions of this item:
- Charles, Sébastien, 2009. "Explaining persistent cycles in a short-run context: firms’ propensity to invest and omnipotent shareholders," MPRA Paper 18520, University Library of Munich, Germany, revised 2009.
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other
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