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Financialisation and the slowdown of accumulation

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Author Info
Engelbert Stockhammer

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Abstract

Over the past decades, the financial investment of non-financial businesses has been rising, and the accumulation of capital goods has been declining. The first part of the paper offers a novel theory to explain this phenomenon. Financialisation, the shareholder revolution and the development of a market for corporate control have shifted power to shareholders and thus changed management priorities, leading to a reduction in the desired growth rate. In the second part, the link between accumulation and financialisation is tested econometrically by means of a time series analysis of aggregate business investment for the USA, the UK, France and Germany. Extensive tests of robustness are performed. For the first three countries, evidence supporting the negative effect of financialisation on accumulation is found. Copyright 2004, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/cje/beh032
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Publisher Info
Article provided by Oxford University Press in its journal Cambridge Journal of Economics.

Volume (Year): 28 (2004)
Issue (Month): 5 (September)
Pages: 719-741
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Handle: RePEc:oup:cambje:v:28:y:2004:i:5:p:719-741

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  1. Özlem Onaran, Nurhan Yentürk, 2001. "Do Low Wages Stimulate Investment? An analysis of the relationship between distribution and investment in Turkish private manufacturing industry," International Review of Applied Economics, Taylor and Francis Journals, vol. 15(4), pages 359-374, October. [Downloadable!] (restricted)
  2. Eckhard Hein, 2008. "Financialisation in a comparative static, stock-flow consistent Post-Kaleckian distribution and growth model," IMK Working Paper 21-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute. [Downloadable!]
  3. Eckhard Hein & Lena Vogel, 2007. "Distribution and growth in France and Germany - single equation estimations and model simulations based on the Bhaduri/Marglin-model," IMK Working Paper 04-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute. [Downloadable!]
    Other versions:
  4. Eckhard Hein & Till van Treeck, 2008. "'Financialisation' in Post-Keynesian models of distribution and growth - a systematic review," IMK Working Paper 10-2008, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute. [Downloadable!]
  5. William Milberg, 2007. "Shifting Sources and Uses of Profits: Sustaining U.S. Financialization with Global Value Chains," SCEPA Working Papers 2007-9, Schwartz Center for Economic Policy Analysis (SCEPA), The New School. [Downloadable!]
  6. Eckhard Hein, 2008. "Shareholder value orientation, distribution and growth – short- and medium-run effects in a Kaleckian model," Department of Economics Working Papers wuwp120, Vienna University of Economics and B.A., Department of Economics. [Downloadable!]
  7. William Milberg and Deborah Winkler, 2009. "Financialization and the Dynamics of Offshoring in the U.S," SCEPA Working Papers 2009-5, Schwartz Center for Economic Policy Analysis (SCEPA), The New School. [Downloadable!]
  8. Eckhard Hein, 2009. "A (Post-) Keynesian perspective on "financialisation"," IMK Studies 01-2009, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute. [Downloadable!]
  9. Eckhard Hein & Till van Treeck, 2007. "'Financialisation' in Kaleckian/Post-Kaleckian models of distribution and growth," IMK Working Paper 07-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute. [Downloadable!]
  10. Yann Guy, 2009. "Industrial Group's Productive and Financial Investment Strategies," Working Papers hal-00402021_v1, HAL. [Downloadable!]
  11. Demir, Firat, 2008. "Financial Liberalization, Private Investment and Portfolio Choice: Financialization of Real Sectors in Emerging Markets," MPRA Paper 3835, University Library of Munich, Germany, revised 01 Apr 2008. [Downloadable!]
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  12. Thomas I. Palley, 2009. "Inside Debt and Economic Growth: A Cambridge - Kaleckian Analysis," IMK Working Paper 02-2009, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute. [Downloadable!]
  13. Soon Ryoo & Peter Skott, 2008. "Financialization in Kaleckian economies with and without labor constraints," Working Papers 2008-05, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
    Other versions:
  14. Alfonso Palacio-Vera, 2005. "Liquidity and growth traps: a framework for the analysis of macroeconomic policy in the 'age' of Central Banks," Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales 05-02, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales. [Downloadable!]
  15. Eckhard Hein & Lena Vogel, 2007. "Distribution and growth reconsidered - empirical results for Austria, France, Germany, the Netherlands, the UK and the USA," IMK Working Paper 03-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute. [Downloadable!]
  16. William Milberg and Deborah Winkler, 2009. "Economic Insecurity in the New Wave of Globalization," SCEPA Working Papers 2009-6, Schwartz Center for Economic Policy Analysis (SCEPA), The New School. [Downloadable!]
  17. Orhangazi, Ozgur, 2007. "Financialization and Capital Accumulation in the Nonfinancial Corporate Sector: A Theoretical and Empirical Investigation on the US Economy, 1973-2004," MPRA Paper 7724, University Library of Munich, Germany. [Downloadable!]
  18. Peter Skott & Soon Ryoo, 2007. "Macroeconomic implications of financialization," Working Papers 2007-08, University of Massachusetts Amherst, Department of Economics. [Downloadable!]
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